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S&P 500 Slumps, Bulls Scatter After Powell Signals Faster Taper

Stock MarketsDec 01, 2021 03:17AM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 slumped Tuesday, after Federal Reserve Chairman Jerome Powell signaled a more aggressive approach to scale-back bond purchases at a time when concerns about the new Omicron variant remained front and center.

The S&P 500 fell 1.9%. The Dow Jones Industrial Average fell 1.9%, or 652 points, the Nasdaq fell 1.6%.

"The economy is very strong and inflationary pressures are high, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at the November meeting, perhaps a few months sooner,”  Powell said in testimony before the Senate Banking Committee.

In a sign that elevated inflation could persistent for longer than expected, Powell conceded that it was “good time to retire that word [transitory].”

Some, however, welcomed the change in tone on inflation from the Fed chief, and were in favor of a faster taper in the wake of a surge in inflation and a strong consumer.  

“I think it's healthy to see Powell recognize that inflation is real, it's not just coming and going, but part of the fabric of the global economy right now,” Eric Diton, president & managing director of The Wealth Alliance told Investing.com in an interview on Tuesday.

“The Fed should taper [faster], I scratched my head as to why they're buying the current volume of bonds every month when we're seeing inflation, strong earnings and very strong consumer demand," he added.

The update from Powell rattled risk sentiment as it arrived amid uncertainty about the impact of the Omicron variant of coronavirus on the economy.

Moderna (NASDAQ:MRNA) chief executive Stéphane Bancel “warned of a material drop,” in vaccine in efficacy against the Omicron variant.

Regeneron (NASDAQ:REGN) also added to fears about the virus impact after saying its Covid-19 antibody drugs could be less effective against the new variant. Its shares fell more than 2%.

Communication services were among the biggest decliners, with Discovery (NASDAQ:DISCA), Dish and Twitter (NYSE:TWTR) leading to the downside.

Twitter Inc (NYSE:TWTR) fell 4% as slew of analysts on Wall Street reacted negatively to news that the Jack Dorsey had stepped down as CEO of the social media company.  

“We believe investors were expecting or hoping for an external candidate to take over … [with] experience that would help it reach its user growth and revenue targets, with a focus on improving ad tech,” Wedbush said in a note as it cut its price target on Twitter to $52 from $69.

Energy followed oil prices lower as fresh concerns about the impact of the new Covid variant on travel demand is likely to force OPEC and its allies to delay plans to increase production at their meeting on Thursday.  

OPEC+ confirming its plan to increase production is “virtually unimaginable in view of the latest market developments,” Commerzbank said in a note

“In our opinion, any such decision would exert further pressure on oil prices in the current market environment, which is hardly likely to be in the interests of the OPEC+ members.”

Tech outperformed relative to other sectors, down just 1%, underpinned by a 3% rise in Apple (NASDAQ:AAPL).

In other tech news, Meta Platforms (NASDAQ:FB) ended lower after the U.K. competition watchdog told the social media giant it must sell GIF-sharing platform Giphy after concluding that the acquisition would reduce competition between social media platforms.

The sell-off on Wall Street could continue given how far markets had rallied during the most recent melt-up, but investors are looking to buy on the dip. 

“We were overdue for a correction, but I'm a buyer into it as a pullback might open up opportunities for tax loss harvesting as well as opportunities for better entry points in equities,” Diton added.

S&P 500 Slumps, Bulls Scatter After Powell Signals Faster Taper
 

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Comments (13)
CFG fdez
CFG fdez Nov 30, 2021 9:26PM ET
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having fun reading this as a passive investor
Atlantic Coast Money
Atlantic Coast Money Nov 30, 2021 6:38PM ET
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Beautiful buying prices before the Santa Rally. Had to lower the gains for November to give a better launchpad for December. Let the meltup continue.
Joel Schwartz
Joel Schwartz Nov 30, 2021 6:38PM ET
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Santa rally 2025 is already priced in at these levels.
Jon Bal
Jon Bal Nov 30, 2021 6:28PM ET
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"Transitory? no i said TRAINsitory..like a train..it just keeps going..choo choo? i have to go return some video tapes"
Marco cuevas
Marco cuevas Nov 30, 2021 6:08PM ET
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What a racket.....Powell: "better call my friends/family before I speak today"
Ric Simon
Ric Simon Nov 30, 2021 5:40PM ET
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Powell thinks there is a "Strong Consumer" ? Now we're screwed. Black Friday down 28% Cyber Monday down 1.4% Yep, consumers are ferocious
Ric Simon
Ric Simon Nov 30, 2021 5:40PM ET
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please refer to the Michigan State Consumer Sentiment chart. Just the facts 😌
Gold Fever
Gold Fever Nov 30, 2021 5:40PM ET
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But all luxury autos, planes, and yachts are at record sales and on back order, aren’t those consumers too..
Whaling Trawler
Whaling Trawler Nov 30, 2021 5:34PM ET
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Sheep bulls scattered and I was left buying all by my lonesome
Ronald Warren
Ronald Warren Nov 30, 2021 5:34PM ET
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Good luck!
John Avenetti
John Avenetti Nov 30, 2021 5:10PM ET
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lol. yeah sure. The US population can't pay the debt let alone all the other programs they pay on. raise the interest on 31T in debt? the monetary system is sunk.
Craig Bartley
Craig Bartley Nov 30, 2021 5:10PM ET
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They seem to be having issues with just slowing the printer down. Just a big party at the savers expense.
Empire Destroyer
Empire Destroyer Nov 30, 2021 5:07PM ET
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You know he sold his stocks at a high and now doesn't care if markets keep dumping 🤣🤣 democracy for ya
John Avenetti
John Avenetti Nov 30, 2021 5:07PM ET
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how do you know??? You dont.
Joe Messeri
Joe Messeri Nov 30, 2021 5:07PM ET
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John Avenetti umm yeah he is out along with all the other cronies. Theyll jack up capital gains next year to fund these happy horse marlarky social programs
Empire Destroyer
Empire Destroyer Nov 30, 2021 5:07PM ET
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wow... I assume you are buying the dip
New Jazenevd
New Jazenevd Nov 30, 2021 5:03PM ET
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Faster tapering will not stop inflation. On the other hand, it can speed up coming of stagflation.
Mir Chang
Mir Chang Nov 30, 2021 5:03PM ET
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One percent interest rate raise would stall inflation.
David David
David9 Nov 30, 2021 4:56PM ET
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I am going to listen to President Xi better on the economy and trades.... these guys here doesn't know how an economy works.
Tobby Olumba
Tobby Olumba Nov 30, 2021 4:51PM ET
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In the game of hardball, Jerome Powell made stocks bad today.
Co Gonz
Co Gonz Nov 30, 2021 4:47PM ET
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labor participation is awful but the economy is strong- productivity is part of gdp
Al Ose
Al Ose Nov 30, 2021 4:37PM ET
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Scatter? Time and a place for everything. See you at S@P 4769 in 4 weeks
Empire Destroyer
Empire Destroyer Nov 30, 2021 4:37PM ET
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2 weeks, after 17th Dec, pretty much holiday
 
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