- US stocks extended earlier losses on Tuesday after tapering comments from Fed Chair Jerome Powell stoked rate-hike fears.
- Investor nerves were already rattled after Moderna’s CEO expressed reservations about the efficacy of his vaccine against the new strain.
- The 10-year Treasury note yield slid.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell
US stocks extended earlier losses on Tuesday following new comments from Jerome Powell. The Fed Chair mulled an earlier-than-expected end to bond tapering, and also remarked that inflation can no longer be considered “transitory.”
Major indexes already opened lower on Tuesday after Moderna’s CEO expressed reservations about the efficacy of his company’s existing vaccine against the new coronavirus strain.
Here’s where US indexes stood as of 11:55 a.m. ET on Tuesday:
- S&P 500: 4,569.72, down 1.8%
- Dow Jones Industrial Average: 34,485.37 (651 points), down 1.9%
- Nasdaq Composite: 15,478.12, down 1.9%
Investors are trying to assess the threat and gravity of Omicron especially as major global economies seem to be on the cusp of a recovery. The strain was deemed a “variant of concern” by the World Health Organization, in part because preliminary evidence suggests it may increase the risk of reinfection with COVID-19.
It did not help that Moderna’s boss, Stephane Bancel, told the Financial Times Tuesday “there is no world” in which vaccine effectiveness is the same against Omicron as against the Delta variant. He added that it will likely take months for vaccine-makers to develop and distribute large numbers of effective shots.
Other drugmakers, such as BioNTech, have also thus far not shed much light on the efficacy of their vaccines against Omicron. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, over the weekend warned that the US might enter a fifth wave of infections.
“This whipsaw price action could become a regular feature over the next couple of weeks as information on the variant trickles out,” said Craig Erlam, senior market analyst at Oanda. “For now, markets will remain very sensitive to indications that vaccines may not protect us this winter as much as we hoped.”
Bond yields, which move inversely to prices, fell with the key 10-year Treasury note yield sliding to 1.448% from Monday’s 1.529%.
Oil prices slipped Tuesday, erasing all of the previous day’s gains. West Texas Intermediate crude oil slipped 3.12% to $67.77 per barrel. Brent crude, oil’s international benchmark, fell 3.26% to $71.03 per barrel.
The Organization of the Petroleum Exporting Countries, due to meet Thursday, is expected to decide whether it will pause supply increases or not.
Gold rose as much as 0.49% to $1,795.76 per ounce.