Wall Street: ‘Powell’s comments threw a monkey in the wrench’

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Fed Chairman Jerome Powell indicated that the United States’ central bank would consider accelerating the withdrawal of bond purchases as inflation risks increase. Further troubled by this, the markets are already battered by the emerging threat of the Omicron COVID-19 variant.

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Wall Street’s main indexes closed lower on Tuesday after Federal Reserve Chairman Jerome Powell indicated that the United States’ central bank would consider accelerating the withdrawal of bond purchases as inflation risks increase, the latest being the COVID-19 pandemic. The already nervous about the version is adding to the pressure on the market.

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In testimony before the Senate Banking Committee, Powell indicated that he no longer regards high inflation as “transient” and that the Fed is again on the timeline to scale back its bond-buying program at its next meeting in two weeks. Will consider

The S&P 500 — a proxy for the health of retirement and college savings accounts — ended 88.27 points, or 1.9 percent, down at 4,567, while the tech-heavy Nasdaq Composite Index was down 245.14 points, or 1.55 percent, at 15,537.69. . The Dow Jones Industrial Average fell 652.11 points, or 1.86 per cent, to end at 34,483.72.

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“Powell’s comments threw a monkey into the ditch in market thinking in terms of potential taper timing. You can see risk-off across the board as a result,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. are.”

“You also have to take into account the Omicron type of concerns. You could argue whether they are more headline risk or reality risk, but regardless, it is having a significant impact on everything related to oil and economic growth. .

Powell’s remarks also prompted speculation among some investors about a possible uptick in interest rate hikes.

Mark said, “The major contributor to the decline in stock prices today is Powell’s commentary regarding the upcoming Fed meeting, which is about accelerating the tapering of their bond-buying program, which clearly leads to That the rates will be hiked soon next year.” Luschini, Jenny Montgomery Scott, chief investment strategist at Philadelphia.

“A somewhat sharper change in tone flattened the market,” Luschini said.

In the meantime, the market had to wait for information on how dangerous the Omicron version could be, the extent to which current coronavirus vaccinations could provide protection and the additional restrictions governments may have to impose that could hurt the economy. , Luschini said.

Tuesday’s decline was broad, with declines in all 11 major S&P sectors. There was a major drop in communication services till late afternoon. Energy remained under pressure throughout the session, as oil prices declined.

Monday’s rally saw stocks regain some of the ground they lost on Friday when news of the virus’s version of the market first sold out.

While the US Food and Drug Administration said it expected to be aware of the effectiveness of existing COVID-19 vaccines against Omicron, vaccine companies appeared divided.

BioNTech’s chief executive said the BioNTech and Pfizer COVID-19 vaccine would potentially provide stronger protection against severe disease from the variant, while the CEO of Moderna Inc told the Financial Times that the COVID-19 The shots are not likely to be as effective against the newer version as they have been. been done earlier.

Shares of Moderna fell, while Regeneron Pharmaceuticals Inc. was also under pressure after it said its COVID-19 antibody treatment and other similar drugs may be less effective against Omicron.

Travel and leisure stocks fell, with both the S&P 1500 airlines and the S&P 1500 hotel, restaurant and leisure indices falling on concerns of greater limit restrictions.

Virus uncertainty has raised renewed alarm at a time when supply chain logjams are weighing on economic recovery and central banks globally are considering a return to pre-pandemic monetary policy to tackle a surge in inflation. Huh.

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