Equities Slip as Cost of Omicron Variant Weighed: Markets Wrap
New York (Dec 9) Both the S&P 500 and Nasdaq 100 retreated, ending a three-day rally, as all major sectors except health care declined. The yield on the U.S. 10-year Treasury, which moves inversely to price, slid to 1.49%. Meanwhile, the Cboe Volatility Index was little changed at 20.
The cost to contain the omicron strain is being tallied up amid mounting concern it will crimp the economic rebound. New work-from-home guidance in the U.K., for instance, could cost the country’s economy £2 billion ($2.6 billion) a month, according to Bloomberg Economics. A study has found omicron is 4.2 times more transmissible than the delta variant in its early stages.
“Ultimately the issue from a health perspective is that even if Omicron does prove to be less severe -- which the initial indications so far have pointed to -- a rise in transmissibility could offset that,” said a team of Deutsche Bank strategists including Jim Reid. That could mean that more people are in the hospital, “even if a lower proportion of them are severely affected.”
The global equity rally faces further potential road bumps ahead from U.S. consumer inflation numbers on Friday and a Federal Reserve meeting next week that may provide clues on the pace of tapering and interest rate increases.
The dollar stayed higher Thursday after a report showed applications for U.S. state unemployment benefits declined to the lowest level since 1969. However, economists flagged difficulties in seasonal adjustments to arrive at that figure. On an unadjusted basis, initial claims climbed.
YahooNews
