Regeneron Pharmaceuticals made a similar statement: The US pharmaceutical company, which is developing a drug against Covid, warned that its antibody therapy and comparable agents could also be less effective against the Omikron variant.
The Dow Jones index of standard values closed on Tuesday just under 1.86 percent in the red at 34,483 points. Overall, the minus for the US benchmark index in the penultimate month of the year is 3.7 percent. The previous annual balance sheet is still clearly positive at 12.7 percent. Another relief is likely to be that the 200-day line, which is currently slightly below 34,350 points and signals the longer-term trend in the Dow, has held up so far.
The market-wide S&P 500 fell 1.9 percent to 4567 meters. After an initially stable course, the Nasdaq 100 lost 1.61 percent to 16,135 points. He continues to record a monthly profit, which, however, shrank to 1.8 percent. The current annual plus is still around a quarter.
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One of the reasons for this is the speech by Fed chief Jerome Powell. On Tuesday, Powell warned of the continued high inflation and announced a reduction in bond purchases. In doing so, he accelerated the downward slide of Wall Street.
It is appropriate to think about completing the process known as tapering a few months early. The subject will likely come up at the interest rate meeting in December. An end to bond purchases is a prerequisite for a turnaround in interest rates, which could now move closer.
Inflation could last longer
The economy is very strong and at the same time inflationary pressure is high. According to Powell, the current high inflation could last longer than originally expected: “It is difficult to predict the continuation and the effects of the supply shortages.
But it currently appears that factors driving inflation will persist for the next year, ”he adds. With the rapid improvement in the labor market, the doldrums are also receding and salaries are rising at a brisk pace.
The recent increase in Covid-19 cases in connection with the new Omikron variant poses risks for employment and economic growth as well as increased uncertainty for price developments.
The Fed’s preferred measure of inflation is personal consumer spending, which excludes energy and food costs. This annual inflation rate was 4.1 percent in October, well above the level of two percent targeted by the Federal Reserve.
The central bank will use its instruments to ensure that the increased price pressure does not become entrenched.
Uncertainty about Omikron remains
The uncertainty surrounding Omikron is also affecting the stock markets worldwide. “It is clear: the pandemic is not over yet,” said independent capital market advisor Ed Yardeni in a webinar on Monday. “We have to be prepared for the fact that we will have to live with her for quite a while.”
However, Yardeni remains optimistic about the situation in the markets. For the end of the year he expects the leading index S&P 500 to stand at 4800 points, an increase of a good three percent. Yardeni believes the S&P 500 could end 2022 at 5200 points.
The capital market expert does not assume that the Omikron variant will cause major upheavals in the economy. “We’ll learn to deal with it,” he clarified. He also expects the Fed to continue tapering bond purchases as planned. He expects two rate hikes for 2022.
The US job market is strong. New dates for November will be published on Friday. “Unemployment will decrease significantly,” believes Yardeni. The Americans would push back into the job market. “And there are many vacancies.”
The fear of falling demand in view of the corona pandemic also hit the oil price, which fell by around four percent. As a result, energy companies also came under pressure. Occidental Petroleum’s shares lost more than two percent.
Look at individual values
Moderna, Pfizer: Vaccine manufacturer stocks are under particular scrutiny today. Stephane Bancel, CEO of Moderna, told the Financial Times that he expected existing vaccines against the Omikron variant to be less effective. According to Oxford University, there is still no evidence of this. The Moderna share falls by more than five percent. The Biontech share is down more than 2.97 percent. Pfizer shares gained 2.54 percent, Novavax shares rose more than 7.56 percent.
Regeneron Pharmaceuticals: Regeneron shares fell 2.73 percent after the company said its Covid-19 drugs may be less effective against the Omikron variant of Covid. Mutations in the variant would suggest that immunity might be reduced.
First Wave Biopharma: Stocks shot up 8.47 after the drug company made progress on a study to develop a drug to treat Covid-19. In later trading, they rise by 6.9 percent.
Meta: The meta share falls at the top by more than three percent. A UK regulator asked the company to sell the Giphy platform. Meta’s acquisition of Giphy would reduce competition between social media platforms.
Wall Street expert Koch: Uncertainty is more serious than bad news
Twitter, Square: Twitter and Square shares are up 3.96 and 2.13 percent, respectively. One day after Jack Dorsey announced his resignation as CEO of Twitter. Dorsey was the chief executive of the social media platform and digital payments company. Bank of America upgraded Square from “underperform” to “neutral” and reiterated a buy rating for Twitter.
Beyond Meat, Oatly: The shares of the meat alternative manufacturer Beyond Meat and the vegetable dairy company Oatly are down more than 5.82 and 3.87 percent respectively. HSBC had downgraded the shares. In a report on the alternative protein market, HSBC said, “With the prospect of increased competition, the growth we forecast will not be enough for many participants to meet their lofty growth targets.”
Travel companies: American Airlines shares lost up to three percent. The cruise companies Carnival, Royal Caribbean and Norwegian Cruise Line lost between one and three percent.
More: Fed Chairman Powell warns of continued high inflation – and holds out the prospect of a reduction in bond purchases