By Peter Nurse
Investing.com -- U.S. stocks are seen opening sharply lower Tuesday, with investors rattled by fresh worries over the ability of current vaccines to cope with a surge of the new Omicron variant of the Covid-19 virus.
At 7 AM ET (1200 GMT), the Dow futures contract was down 420 points, or 1.2%, S&P 500 futures traded 50 points, or 1%, lower and Nasdaq 100 futures dropped 110 points, or 0.7%.
The major indices closed higher on Wall Street Monday after President Joe Biden reassured investors that lockdowns were off the table and there would be no new travel restrictions.
However, sentiment abruptly turned negative early Tuesday after Moderna (NASDAQ:MRNA) chief Stephane Bancel stated, in a Financial Times interview, that existing vaccines would struggle to cope with the omicron variant, predicting a ‘material drop’ in their effectiveness.
He also warned that it would take months before the drugmakers can manufacture the new variant-specific injections in sufficient quantities to be effective.
Regeneron (NASDAQ:REGN) added Tuesday that analysis suggested its Covid-19 antibody cocktail could have reduced activity against the Omicron variant.
Federal Reserve Chair Jerome Powell had stated, in prepared testimony released Monday, that the Omicron variant poses risks to both sides of the central bank’s mandate to achieve stable prices and maximum employment.
Investors will be looking to see whether the Fed chief adds to these comments when he appears before the Senate Banking Committee later Tuesday.
Turning to the corporate sector, Twitter (NYSE:TWTR) will be in focus the day after founder and CEO Jack Dorsey confirmed he is to step down from his role at the social media giant, to be replaced by former chief technology officer Parag Agrawal.
Staying with social media, Facebook (NASDAQ:FB) will also be in the spotlight after Britain's competition regulator directed Meta Platforms, Facebook’s owner, to sell animated images platform Giphy for competitive reasons.
Crude prices retreated as the Omicron concerns returned, with traders fretting about fresh lockdowns and the associated hit to global demand.
That said, expectations are growing that the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, will put on hold the plans to add 400,000 barrels a day in January when it meets later in the week.
The American Petroleum Institute is also due to release its latest estimate of U.S. crude inventories later in the session.
By 7 AM ET, U.S. crude futures traded 2.6% lower at $68.10 a barrel, having climbed 2.6% on Monday, while the Brent contract fell 2.7% to $71.22, after rising 1% during the previous session.
Additionally, gold futures rose 0.6% to $1,795.15/oz, while EUR/USD traded 0.5% higher at 1.1347.