Initial reports from Reuters and Bloomberg have cited the first signs of the Omnicron variant hitting U.S. shores. The Centers For Disease Control have identified the first case of the Omicron variant in California, US. According to reports from Bloomberg, the CDC explained that the individual traveler returned from South Africa as self-quarantined since testing positive. According to early reports, the individual was said to have been fully vaccinated and showed mild symptoms.
Why Are Stocks Down Today?: Omicron Concern Jolts Markets
Virus news paired with comments from Fed Chair Jerome Powell gave way to seesaw action in the stock market this week. Monday, the Russell Small-Cap ETF (NYSE: IWM) opened at $226.22 and has traded in a wide range ever since. Even though this has been the case, during the past three sessions, the IWM, along with other major ETFs, including the NASDAQ ETF (NASDAQ: QQQ) and Dow Jones (NYSE: DIA), showed trends more closely aligned with “follow the bouncy ball” than anything else.
Earlier this week, the World Health Organization said that South Africa Covid hospitalizations were rising. The WHO also took a step back and explained that it was still too early to know the severity of this new variant.
Adding to virus concerns were comments from Fed Chair Jerome Powell this week. Effectively, the Fed Chair backstopped on “transitory” language used by the Fed to describe the current rates of inflation seen across global economies.
Inflationary Concerns Add To Market Volatility
Fed Chair Powell gave a shock to the markets on November 30 after discussing speeding up the central bank’s taper of the $120 billion monthly bond-buying program. Powell said that “the taper need not be a disruptive event in markets. I don’t expect that it will be. It hasn’t been so far. We’ve telegraphed it.”
Furthermore, his commentary on inflation also seemed to hit a nerve with the market. We’ve all become well aware that inflation is something to deal with right now while supply chains work out bottleneck issues. However, the storyline that was told always referenced that inflation was “transitory” in nature. That was a much different tone based on remarks from the recently reinstated Fed Chairman this week.
Powell explained that now may be a good time to “retire” the term transitory inflation. Echoing the sentiment surrounding a more direct approach to inflation, US Treasury Secretary Janet Yellen made remarks a few weeks back discussing a process that considers the precise impact that the virus has on the economy.
“The pandemic has been calling the shots for the economy and for inflation…And if we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do.”
Janet Yellen, speaking on CBS’s Face the Nation.
What Does This Mean For The Stock Market Today?
This isn’t a novel instance that traders have dealt with. In the stock market today, multiple headlines brought more volatility. Earlier this morning, we reported on recent issues facing Moderna (NASDAQ: MRNA) and its case against small-cap company Arbutus (NASDAQ: ABUS):
Meanwhile, rising restrictions in different parts of the world when it comes to unvaccinated individuals. The WHO, for instance, expressed that older unvaccinated adults should delay travel to areas with community transmission. Furthermore, countries including the US require stricter testing at borders for all travelers. Japan has gone as far as banning travel on foreigners entering the nation.
Those traveling in and out of Canada will be required to have a vaccination; the list goes on. As more data comes to light, we’ll know more about omicron and its lasting impact (if any). For now, we see that it has officially made its way to the US, and so far, markets aren’t liking that news.