Omicron news sinks markets
Stocks dropped sharply Wednesday after the Centers for Disease Control said the Omicron variant had been found in the US — with a measure of investor worry spiking to its highest level since January.
The Dow Jones Industrial Average plummeted 462 points, or more than 1.3 percent, as it became clear the US wouldn’t escape the latest COVID wave.
Markets had begun the day with relative optimism — with the Dow up by more than 500 points by midday trading — but when South Africa reported nearly twice as many new COVID-19 cases on Wednesday compared with Tuesday, they started falling.
And when the CDC said Omicron had been identified in a fully vaccinated person in California who had recently traveled to South Africa, the bottom fell out.
The tech-heavy Nasdaq ended the day down nearly 1.8 percent at 15,254 and the S&P 500 fell nearly 1.2 percent to 4,513.
CBOE’s Volatility Index, which measures investor jitters and is known as the VIX, spiked to its highest level since January, rising nearly 15 percent to end the day at 31.12.
The losses come after Tuesday’s selloff left the Dow 650 points lower as investors fretted over fears that Omicron could wreak fresh havoc on the world economy.
Federal Reserve Chairman Jerome Powell helped accelerate the losses on Tuesday after he warned that the central bank will still likely discuss hastening the tapering of its bond-buying program at its December meeting, despite new threats posed by Omicron.
“At this point, the economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases . . . perhaps a few months sooner,” Powell told lawmakers Tuesday. “I expect that we will discuss that at our upcoming meeting.”
Meanwhile, the Fed chairman told the House Financial Services Committee on Wednesday that inflation may not recede in the second half of the year, further underlining fears of an economy out of whack.