Written by Brenda Nakalema

Dow falls over 600 points with Omicron fears igniting fresh selling during Christmas week

Since Monday morning, U.S stock indexes have been trading lower amidst fears around the fast-spreading Covid- 19 variant, Omicron. A …

Since Monday morning, U.S stock indexes have been trading lower amidst fears around the fast-spreading Covid- 19 variant, Omicron.

A snap-shot of how the stock indexes are trading.

  • The S&P 500 SPX, -1.60% traded 82 points at 4,538, a 1.8% drop.
  • The Dow Jones Industrial Average DJIA, -1.74% fell 650 points at 34, 713, a 1.8% drop.

Weighed by losses in Goldman Sachs GS -3.48%, UnitedHealth Group Inc UNH, -1.37% and Caterpillar Inc. CAT -3.69%

  • The Nasdaq Composite Index COMP, -1.78% fell 286 points, at 14,883, a 1.9% drop placing the tech-heavy index about 7% below its Nov.19 record close. Last Friday, the Dow fell more than 500 points, with both the S&P 500 and Nasdaq following closely behind.

Markets were witnessing slumps in the beginning to a short trading week owing to Christmas. All 11 sectors of the S&P 500 were fell to negative levels led by sharp declines in financials SP500.40, -2.67, energy SP500.10, -2.08% and materials SP500.15, 2.50% as crude prices plunged.

The Christmas cheer has been slightly lower this year for some bullish investors as worries about Omicron have resulted in lockdowns in parts of Europe and the general mood being one of fear and concern for the coming weeks.

The other factor that spurred massive selling was the news that President Joe Biden’s signature $2 trillion spending plan might be dead in the water. Senator Joe Manchin, D-W.Va communicated his decision against the plan, a potentially huge loss for Biden and the Democrats.

Right on the heels of that announcement, Goldman Sachs downgraded their U.S growth forecasts for 2022, foreseeing the difficulties that might arise in getting the spending bill passed.

Last week’s losses came as investors weighed the Federal Reserve’s latest decisions, speeding up its reduction of monthly bond purchases and predicting three interest-rate hikes next year.

“With flight to safety being the overriding concern, lower bond yields are questioning the FOMC’s ability to act as hawkish as they signalled last week. A range of uncertainties is challenging markets at a time where thinner trading volumes ahead of the holiday period can exacerbate price swings,” said John Hardy, FX strategy at Saxo Bank.

Companies in focus this week

  • Oracle Corp, (ticker: ORCL) confirmed a deal to acquire electronic-medical-records company Cerner Corp. (ticker: CERN) for more than $30 billion. Shares were down 3%, with Cerner shares up 1%.
  • Shares of BP Midstream Partners (ticker: BPMP) rose 13% after the energy giant, BP, announced an agreement to buy the master limited partnership in an all-stock deal.
  • Novavax (ticker: NVAX) shares fell nearly 2% despite the European Medicines Agency recommendation that granted emergency use authorization for its Covid-19 vaccine.
  • Moderna (ticker: MRNA), -5.10% shares dropped 1.4% after the pharmaceutical group reported that a booster shot of its Covid-19 vaccine provided 37-fold protection against the Omicron variant when combined with two vaccine shots.
  • Biogen BIIB, 0.98% shares fell 0.7% as the biotechnology company said it would lower the price of its Alzheimer’s drug aduhlem by 50% to about $28,200 from 1st Jan.

A snap-shot of how other assets are trading.

  • According to Dow Jones Market Data, the yield on the 10-year Treasury note TMUBMUSD10Y 1.396% fell to 1.391%, a drop of about 2 basis points. Treasury yields and prices move in opposite directions.
  • The ICE U.S Dollar Index DXY, -0.13%- a measure of the currency against half a dozen other monetary units- was down 2%.
  • Gold futures GC00 for February delivery GCG22 -0.61% fell to $1, 795.10 an ounce, a drop of 0.5%.
  • The Stoxx Europe 600 Index SXXP -1.38% closed 1.4% lower, while London’s FTSE 100 index UKX, -0.99%, and fell 1%.
  • On the Asian side, the Shanghai Composite Index SHCOMP, -1.07%, lost 1%, the Hang Seng Index HSI -1.93% fell 1.9% in Hong Kong, China’s CSI 300 -1.50% slumped 1.5% lower and Japan’s Nikkei 225 Index NIK -2.13% fell 2.1%.