Wall Street joins global slump for stocks; S&P 500 down 1.3%
Wall Street is joining a worldwide slump for financial markets on Monday amid worries about how badly the omicron variant, inflation and other forces will hit the economy.
The S&P 500 was 1.3% lower in afternoon trading, following up on similar drops across Europe and Asia. Stocks of oil producers helped lead the way lower after the price of U.S. crude fell 3.7% on concerns the newest coronanvirus variant could lead factories, airplanes and drivers to burn less fuel.
Omicron may be the scariest force hitting markets, but it’s not the only one. A proposed $2 trillion spending program by the U.S. government took a potential death blow over the weekend when an influential senator said he could not support it. Markets are also still absorbing last week’s momentous move by the Federal Reserve to more quickly remove the aid it’s throwing at the economy, because of rising inflation.
They all combined to drag the Dow Jones Industrial Average down 493 points, or 1.4%, to 34,872, as of 2:16 p.m. Eastern time. The Nasdaq composite fell 1.4%, while Germany’s DAX lost 1.9% and Japan’s Nikkei 225 dropped 2.1%. Five stocks fell for every one that rose on the New York Stock Exchange.
“Omicron threatens to be the Grinch to rob Christmas,” Mizuho Bank’s Vishnu Varathan said in a report. The market “prefers safety to nasty surprises.”
With COVID19 cases surging again, leaders of governments around the world are weighing the return of restrictions on businesses and social interactions when many people seem to be sick of them.
The Dutch government began a tough nationwide lockdown on Sunday, while a U.K. official on Monday said he could not guarantee new restrictions would not be announced this week. The Natural History Museum, one of London’s leading attractions, said Monday it was closing for a week because of “front-of-house staff shortages.”
In the U.S., President Joe Biden will announce on Tuesday new steps he is taking, “while also issuing a stark warning of what the winter will look like for Americans that choose to remain unvaccinated,” the White House press secretary said over the weekend. Occidental Petroleum slid 3.9%, leading a long list of losing oil stocks. Producers of raw materials and financial companies were also down sharply amid the omicron worries. Steelmaker Nucor lost 5.8%, and Synchrony Financial, which offers store-brand credit cards and other financial products, dropped 5.6%.