Dow Jones falls by 433 points as surging COVID cases caused by Omicron variant spook traders

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US stocks ended trading on Monday down by more than 1 percent, pressured lower by surging Omicron coronavirus cases and a possible fatal blow to a $1.75 trillion U.S. domestic spending bill, with oil prices plunging.

Stock indexes retreated more than 1 percent, dropping 433.28 points to close at 34,932.16, as positive COVID-19 case counts rose and President Joe Biden’s social spending and climate bill hit a significant setback. 

US COVID-19 cases have risen 50 percent this month, and the World Health Organization has said that cases are doubling in one-and-a-half to three days in areas with community transmission.

Oil investors feared that new restrictions, which European countries are implementing, would weigh on fuel demand, sending crude prices lower.

Shares of Boeing fell by more than 2 percent while investment banking giant Goldman Sachs saw its stock price slide by more than 2.6 percent on Monday.

Traders wear face masks as they work on the floor of the New York Stock Exchange on Wall Street in New York City on Monday

American Express fell by more than 4 points on Monday.  

Occidental Petroleum slid 3.8 percent, leading a long list of losing oil stocks. Producers of raw materials, technology companies and financial stocks also fell amid the omicron worries. 

Steelmaker Nucor lost 5.8%, Microsoft slid 1.2 percent and Synchrony Financial, which offers store-brand credit cards and other financial products, dropped 5.2 percent.

Cruise line operators got a boost after Carnival gave an optimistic forecast for 2022, despite growing concerns about the recent rise in COVID cases worldwide. 

Carnival gained 3.4 percent for the biggest gain in the S&P 500, while Royal Caribbean rose 0.3 percent and Norwegian Cruise Line added 2 percent. 

Meanwhile, shares of Netflix rose by more than 1 percent on Monday, though other stocks that benefited during the lockdowns last year like Amazon saw their share prices slip. 

The Dow Jones Industrial Average fell by more than 433 points, or 1.23 percent, on Monday

‘It was kind of a triple whammy on the economy over the weekend: Omicron, the Fed, and taking the fiscal initiative off the table,’ said Jack Ablin, chief investment officer at Cresset Capital Management. 

‘The market is taking a hit. I think it’s an economic reset that investors are kind of gauging.’

The economic scare comes after the Federal Reserve decided last week to end its pandemic-era stimulus more quickly, with the central bank signaling at least three quarter-percentage-point interest rate hikes by the end of 2022.

In light of rising COVID-19 cases, the World Economic Forum postponed its annual meeting, which had been due to take place in the Swiss mountain resort of Davos in January, until mid-2022.

Some economists expect the US economy to grow more slowly next year after US Senator Joe Manchin, a conservative Democrat who is key to Biden’s hopes of passing the investment bill, said on Sunday he would not support the package.

The Dow Jones Industrial Average closed 1.23 percent lower at 34,932.16, while the S&P 500 ended the day down 1.14 percent at 4,568.02. The Nasdaq Composite dropped 1.24 percent to 14,980.94.

MSCI’s gauge of stocks across the globe shed 1.35 percent.

Oil prices dropped amid concerns the spread of the Omicron variant would crimp demand for fuel.

US crude recently fell 2.12 percent to $69.22 per barrel and Brent was at $72.01, down 2.05 percent on the day.

US COVID-19 cases have risen 50 percent this month, and the World Health Organization has said that cases are doubling in one-and-a-half to three days in areas with community transmission. The image above shows people waiting in line for a COVID-19 test in New York’s Times Square on Monday

While coronavirus restrictions cloud the outlook for economic growth, they also risk keeping inflation elevated, prompting central banks to consider raising rates.

The dollar came under pressure on Monday as US Treasury yields slipped. 

The dollar index fell 0.137 percent. In recent weeks it has rallied, and is up about 7 percent for the year.

The yield on the three-year Treasury note was down 1.9 basis points at 0.9069 percent in afternoon trading, while yields on longer-term government debt rose throughout the day.