Dow Tumbles 500 Points as Omicron Fears Drag Markets

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Stocks were falling Monday, pulled down by fears over a surge in global omicron infections and concerns of the impact of rising inflation.

The Dow Jones Industrial Average was down 556 points, or 1.57%, to 34,808 at last check, while the S&P 500 was off 1.46% and the tech-heavy Nasdaq lost 1.52%.

The World Health Organization said infections are doubling every 1.5 to 3 days.

Dr. Anthony Fauci, the president’s chief medical adviser, said on NBC’s “Meet the Press” Sunday that omicron is now “raging through the world”, making the need for Americans to get a third vaccination dose more crucial than ever.

President Joe Biden plans to speak Tuesday on the status of the fight against Covid-19 and discuss government help for communities in need of assistance.

“With omicron fears taking hold, coupled with the Fed distancing from their accommodative stance last week, we’re looking at a potential recipe for volatility,” Chris Larkin, managing director of trading with E*Trade Financial. “What’s more is the Santa Claus rally comes into question. Meaning that historically the market has tended to enter a bullish phase in the last 8 or so trading days of the year. 

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But, with no shortage of macro factors and potentially lighter trading volumes given the holiday, Larkin said “we could see some bumps in the road.” 

“For traders gauging the likelihood of a Santa Claus rally,” Larkin said, “they may want to take into account the tendencies the market has exhibited in years past — the second day before the Christmas holiday and the day after had the strongest combination of return size, while the fourth and fifth days after Christmas were the weakest performers.” 

Meanwhile, Goldman Sachs trimmed its first quarter growth forecast to 2% from 3%, noting that the U.S. fiscal impulse fiscal “will become somewhat more negative than we had expected” as a result of Democratic Senator Joe Manchin’s decision to withdraw support for President Joe Biden’s “Build Back Better” program.

Moderna  (MRNA) – Get Moderna, Inc. Report fell even after the drugmaker said its booster shot induced a big jump in antibodies that can fight against the omicron variant.

Biogen  (BIIB) – Get Biogen Inc. Report rose modestly after unveiling plans to cut the price of its Alzheimer’s drug in half as it looks to expand the global market for the recently-approved treatment.