Stocks moved sharply lower during trading on Tuesday, largely offsetting the notable rebound seen in the previous session. With the steep drop on the day, the Dow and the S&P 500 fell to their lowest closing levels in at least a month.<\/p>\n
The major averages saw continued weakness going into the close of trading. The Dow plunged 652.22 points or 1.9 percent to 34,483.72, the Nasdaq slumped 245.14 points or 1.6 percent to 15,537.69 and the S&P 500 tumbled 88.27 points or 1.9 percent to 4,567.00.<\/p>\n
The sell-off on Wall Street partly reflected renewed concerns about the new coronavirus<\/span> variant after Moderna’s (MRNA) CEO said in an interview that Covid-19 vaccines are likely to be less effective against Omicron.<\/p>\n Moderna CEO Stephane Bancel said in an interview with the Financial Times that it would take a couple of weeks to determine how much the mutations have affected the efficacy of the vaccines currently available in the market.<\/p>\n “Depending on how much it dropped, we might decide on the one hand to give a higher dose of the current vaccine around the world to protect people,” Bancel said. “Maybe people at very high risk, the immunocompromised, and the elderly should need a fourth dose.”<\/p>\n Regeneron Pharmaceuticals (REGN) has also warned its Covid-19 antibody cocktail and similar drugs could be less effective against the Omicron variant.<\/p>\n Stocks saw further downside after Federal Reserve Jerome Powell suggested during Congressional testimony that the central bank would discuss accelerating the pace at which it reduces its asset purchases during the next monetary policy meeting.<\/p>\n “At this point, the economy<\/span> 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 \u2026 perhaps a few months sooner,” Powell said.<\/p>\n In early November, the Fed announced plans to begin reducing its $120 billion in monthly bond purchases by $15 billion per month.<\/p>\n Powell’s comments suggesting accelerated tapering comes as he told the Senate Banking Committee the recent surge in new Covid-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation. <\/p>\n “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions,” Powell said.<\/p>\n The potential for the intensification in supply-chain disruptions comes as Powell noted pandemic-related supply and demand imbalances have already contributed to notable price increases in some areas. <\/p>\n Powell also indicated the Fed should retire the word “transitory” when referring to inflation, noting the central bank views it as meaning not leaving a lasting mark on the economy rather than short-lived.<\/p>\n Sector News<\/p>\n Tobacco stocks extended a recent sell-off, dragging the NYSE Arca Tobacco Index down by 3.6 percent to its lowest closing level in almost ten months.<\/p>\n A notable drop by treasury yields also weighed on financial stocks, with the NYSE Arca Broker\/Dealer Index and the KBW Bank Index tumbling by 3.2 percent and 3.1 percent, respectively.<\/p>\n Transportation stocks also saw substantial weakness amid concerns about new travel restrictions as a result of the omicron variant, resulting in a 3.2 percent nosedive by the Dow Jones Transportation Average.<\/p>\n Energy, utilities, software and housing stocks also showed significant moves to the downside on the day, reflecting broad based selling pressure on Wall Street.<\/p>\n Other Markets<\/p>\n