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Wall St ends lower as taper acceleration worries pile onto virus angst

Stock MarketsNov 30, 2021 06:16PM ET
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© Reuters. FILE PHOTO: A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in New York City, New York, U.S., July 19, 2021. REUTERS/Andrew Kelly

By Devik Jain, Ambar Warrick and Sinéad Carew

(Reuters) - Wall Street's main indexes closed lower on Tuesday after Federal Reserve Chair Jerome Powell signaled that the U.S. central bank would consider speeding up its withdrawal of bond purchases as inflation risks increase, piling pressure onto a market already nervous about the latest COVID-19 variant.

In a testimony before the Senate Banking Committee, Powell indicated that he no longer considers high inflation as "transitory" and that the Fed would revisit the timeline for scaling back its bond buying program at its next meeting in two weeks.

"Powell's comments threw a monkey in the wrench in market thinking in terms of potential taper timing. You're seeing as a result of that, risk-off across the board," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

"You also have to factor in the Omicron variant concerns. You can argue whether they're more headline risk or reality risk but regardless, it's having a significant impact on oil, and everything that's tied to economic growth."

Powell's comments also prompted speculation among some investors about a potential acceleration in interest rate hikes.

"The principal contributor to the decline in stock prices today is the Powell commentary, regarding the upcoming Fed meeting, about accelerating the tapering of their bond buying program, which obviously leads to the prospect that rate hikes come sooner next year," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

"That somewhat hawkish shift in tone caught the market flatfooted," Luschini said.

Meanwhile, the market was also left waiting for information about how dangerous the Omicron variant might be, the degree to which current vaccinations could offer protection and the additional restrictions governments might have to impose that could hurt the economy, Luschini said.

The Dow Jones Industrial Average fell 652.22 points, or 1.86%, to 34,483.72, the S&P 500 lost 88.27 points, or 1.90%, to 4,567 and the Nasdaq Composite dropped 245.14 points, or 1.55%, to 15,537.69.

For the month, the S&P registered a decline of 0.8%, while the Dow dropped 3.7% and the Nasdaq eked out a 0.25% gain.

Only seven of the benchmark S&P 500 components gained ground on Tuesday.

For the day, all the 11 major S&P industry sectors fell with seven of those sectors falling more than 2%. Communication services lead the losses with a 3% drop followed by Utilities' 2.9% drop. As oil prices tumbled, energy were under pressure throughout the session, closing down 2.5%.

The top performer was information technology, falling just 0.96%, with help from Apple Inc (NASDAQ:AAPL), which boasted a recording closing high and a 3.2% gain for the day.

Tuesday's decline was a sharp reversal after Monday's rally in which stocks regained some ground they had lost on Friday when the market sold-off swiftly on news of the virus variant.

"The market is clearly in some treacherous waters right now. You've had two significant pullbacks out of the last three trading days. This is certainly shaking some of the complacent longs in the market," said Wedbush's James.

While the Food and Drug Administration said it hopes to have information about the effectiveness of current COVID-19 vaccines against Omicron, vaccine companies were divided.

BioNTech's chief executive said the vaccine his company supplies in partnership with Pfizer (NYSE:PFE) will likely offer strong protection from severe illness in variant cases. But Moderna (NASDAQ:MRNA) Inc's CEO told the Financial Times that COVID-19 shots are unlikely to be as effective against the new variant as they have been previously.

Moderna shares fell 4.4% while Regeneron Pharmaceuticals Inc (NASDAQ:REGN) lost 2.7% after it said its COVID-19 antibody treatment and other similar drugs could be less effective against Omicron.

Travel and leisure stocks slumped, with the S&P 1500 Hotels, Restaurant and Leisure indexes fell more than 2% while the S&P 1500 Airlines index lost 0.6%.

The small-cap Russell 2000 index fell 1.9%.

The virus uncertainty has triggered fresh alarm at a time when supply chain logjams are weighing on economic recovery and central banks globally are contemplating a return to pre-pandemic monetary policy to tackle a surge in inflation.

Meanwhile, data showed U.S. consumer confidence slipped in November amid concerns about the rising cost of living and relentless COVID-19 pandemic.

Declining issues outnumbered advancing ones on the NYSE by a 3.82-to-1 ratio; on Nasdaq, a 2.40-to-1 ratio favored decliners.

The S&P 500 posted seven new 52-week highs and 45 new lows; the Nasdaq Composite recorded 28 new highs and 572 new lows.

Tuesday registered the highest volume trading session for U.S. exchanges since June with 16.13 billion shares changing hands, compared with the 11.12 billion moving average for the last 20 sessions.

Wall St ends lower as taper acceleration worries pile onto virus angst
 

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Comments (40)
Richard Ash
Richard Ash Nov 30, 2021 11:57PM ET
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USA kept tapering for to long. Massive deficit which will need to paid at some point in the future. With low interest rates there is no ammunition for any future event except money printing. Stop printing money and raise the rates. The strong will survive
Fernando Fernandez
Fernando Fernandez Nov 30, 2021 8:44PM ET
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Price value
Dave Jones
Dave Jones Nov 30, 2021 5:52PM ET
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the gig is up
MK MK
MK MK Nov 30, 2021 3:26PM ET
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With that huge inflation he is still printing?! Sell USD, it is fake currency
Aleksandr Radchenko
Aleksandr Radchenko Nov 30, 2021 3:26PM ET
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scientists say that long ago people had shells as their currency. at other times, different metals were used as currencies. the one who now buys gold in the hope that the old days will return, he should also buy shells: in case humanity returns to the past.
Rob Chan
Rob Chan Nov 30, 2021 2:44PM ET
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Market going down due to new strain is all hype. Big players need news to make big money.We survived when there was no vaccine and the market went up like anything. Will it sink now when there are so many vaccines ! it's the way institutions make money.
Aleksandr Radchenko
Aleksandr Radchenko Nov 30, 2021 2:44PM ET
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you saw the fake news, but it was actually a Black Friday and Cyber ​​Monday sale
David David
David9 Nov 30, 2021 2:30PM ET
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When they start to raise rates, everything is going to tumbled down.
Richard Ash
Richard Ash Nov 30, 2021 2:30PM ET
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I guess when rates go up to a massive 1% we will all be in trouble
Mox Mox
Mox Mox Nov 30, 2021 2:07PM ET
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do the opposite he says
Steffen vdm
Steffen vdm Nov 30, 2021 1:33PM ET
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it took Powell a couple of months to come to that conclusion on inflation? Jeez...
perplexed76 .
perplexed76 . Nov 30, 2021 1:33PM ET
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maybe he knew it well himself but manipulating the moment
Mitchel Pioneer
Mitchel Pioneer Nov 30, 2021 1:31PM ET
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And the "late trade" FRAUD begins in earnest.  What an absolute joke.
Ronald Warren
Ronald Warren Nov 30, 2021 1:31PM ET
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I'd just like to know how much money Powell is creating today to offset the selling.
Andres GG
Andres GG Nov 30, 2021 1:28PM ET
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Why are these CEOs allowed to speculate in such a fashion?
Empire Destroyer
Empire Destroyer Nov 30, 2021 1:28PM ET
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Start up/scale up CEOs are like that, check Tesla, it's a tech start in comparison to dinosaurs like Ford/Toyota... don't see their CEOs on media spouting stuff to tank stocks
Aleksandr Radchenko
Aleksandr Radchenko Nov 30, 2021 1:28PM ET
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is someone stopping you from playing your game? who is stopping you from establishing your own rules? you can nominate yourself for the office of President and change everything. act!
Mart Mala
Mart Mala Nov 30, 2021 1:07PM ET
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instead of studying the technicals and the fundamentals to predict the market moves , getting clearer n clearer that the psychological aspect of wall street is what moves the trend. Wall street does not move with the crowd. To prove my point watch what happens to the market after NFP data is released this week.
Zebra Lo
Zebra Lo Nov 30, 2021 12:46PM ET
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The greedy Street needs more green paper printed to inject into the market
Joe Messeri
Joe Messeri Nov 30, 2021 12:45PM ET
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Sonwjst is really going on is smart big moneh is bookimg profit rathwr than risk invreasws capital gains in 2022 to keep social programs rolling to keep his voting base appeased
Mitchel Pioneer
Mitchel Pioneer Nov 30, 2021 12:45PM ET
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Intercept #2 in progress, as more losses are whisked out of the system.  Assume the proper position America, and get ready for the miracle "in late trade," where "investors" come out of the woodwork to buy "beaten down shares."  Can make this stuff up folks.  Yes indeed, this "market" is more of a joke than anyone could imagine.
Casador Del Oso
Casador Del Oso Nov 30, 2021 12:45PM ET
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Only 49% left to go...
TheEnd IsNigh
TheEnd IsNigh Nov 30, 2021 12:44PM ET
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No doubt the world would be a better place if Powell was replaced by the Jolly Chimp (monkey clapping cymbals together). Probably would yield better results.
jj mm
jj mm Nov 30, 2021 12:27PM ET
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powell and his gangsters traders are making millions manipulating the market. when there is no threat...there is no inflation,all is fine and transitory. when there is a resurgence in covid19 and more stability needed,then Powell says...sorry the inflation is here and we should act. Unbelievable
Marco cuevas
Marco cuevas Nov 30, 2021 12:27PM ET
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Oh you know they had a good talk "wink wink" over the weekend about what moves to make....market is fixed.
Marco cuevas
Marco cuevas Nov 30, 2021 12:25PM ET
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And this guy got resigned to 4 more years...good lord.
Stan Smith
Stan Smith Nov 30, 2021 12:19PM ET
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Bet the farm tapering won't happen. Markets can't survive without the punchbowl. The worsening Omicron event will be the impetus for more stimulus then markets will soar...again and again!!
Tom Skinner
Tom Skinner Nov 30, 2021 12:19PM ET
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Masks will save us... /sarc
Pratt Man
Pratt Man Nov 30, 2021 12:16PM ET
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So what will happen when on the merchandise stuck on container ships, or being loaded on to ships now, reaches the warehouses in America, and those warehouses are stuffed to the brim and carry alot of old merchandise? Deflation.
William Bailey
William Bailey Nov 30, 2021 12:11PM ET
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Fed ran outta runway because banks are diminishing treasuries to buy , so wallstreet wont get enough cash in ling run and a triple crash woilf happen
Go DaBoys
Go DaBoys Nov 30, 2021 12:11PM ET
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You have to admit that the inflation is atypical. Normally you have too much money in the economy so you take some back out with higher rates. This one is supply chain unable to meet demand. Is raising the rate going to fix the supply chain problems and the prices going up because of it?
William Bailey
William Bailey Nov 30, 2021 12:11PM ET
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Fed banged the pooch one time to many …
Mitchel Pioneer
Mitchel Pioneer Nov 30, 2021 12:11PM ET
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Contrived shortages and manufacturers testing the upper limits of the US consumers reckless spending behavior.
bharat kabra
bharat kabra Nov 30, 2021 12:05PM ET
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all is well market recovery???
Sunjay Panse
Sunjay Panse Nov 30, 2021 12:05PM ET
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Any doubt?
George Gao
George Gao Nov 30, 2021 11:58AM ET
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finally Powell comes out of 2018 fear which made trillions wiped off from stock market. will watch whether he is the man!
Al Gore
Al Gore Nov 30, 2021 11:54AM ET
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master market manipulator
 
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