US close: Stocks turn sharply negative as Omicron arrives in US

dl wall street st new york city nyc nyse stock exchange ny dow jones nasdaq sp finance us usa united states of america — Wall StreetSharecast photo / Josh White

Wall Street stocks turned sharply to close well below the waterline on Wednesday, as the US confirmed its first case of the ‘Omicron’ variant in California.

At the close, the Dow Jones Industrial Average was down 1.34% at 34,022.04, as the S&P 500 fell 1.18% to 4,513.04 and the Nasdaq Composite was off 1.83% at 15,254.05.

The Dow closed 461.68 points lower on Wednesday, in a wild reversal of their positive trajectory earlier, after Joe Biden’s chief medical advisor Anthony Fauci confirmed the first case of Omicron in the US.

“The California and San Francisco departments of public health and the CDC have confirmed that a recent case of Covid-19 among an individual in California was caused by the Omicron variant,” Fauci said.

Despite that eventuality being widely expected sooner or later, the confirmation from Dr Fauci saw market participants slamming the brakes on the optimism shown at the start of the day.

“North American equity markets erased early gains, as reopening-related sectors suffered losses,” said analysts at TD Securities.

“Rich value-stocks also took a dive.

“Investors are increasingly cautious about the Omicron variant as well as the likelihood of faster tapering.”

Federal Reserve chairman Jerome Powell had shaken markets on Tuesday, after he said the central bank would discuss speeding up the taper of its minimum $120.0bn a month bond-buying programme despite the potential disruption presented by Omicron.

Powell said he believed cutting the pace of monthly bond-buying could now move quicker than the $15.0bn a month rate outlined earlier in the month.

On the macro front, the Mortgage Bankers Association revealed applications to refinance a home slumped 15% in the week ended 26 November as the average rate on a 30-year mortgage with conforming loan balances increased to 3.31% from 3.24%, with points rising to 0.43 from 0.36 for loans with a 20% down payment.

Mortgage applications to purchase a home rose 5% week-on-week but were 8% lower than at the same time a year ago.

Elsewhere, private sector employment in the US grew a little more than expected in November, according to the latest data from ADP.

Employment rose by 534,000 from October, coming in ahead of expectations for a 525,000 increase.

Meanwhile, the October total of jobs added was revised from 571,000 to 570,000.

On a different note, IHS Markit's final manufacturing PMI for November came in at 58.3, lower than expected, while the Institute for Supply Management's November manufacturing PMI came to 61.1, an increase of 0.3 from October.

Lastly, October's construction spending report revealed spending also rose at a slower than expected clip, but a positive historical revision helped somewhat offset the miss.

In equities, the legacy air carriers were on the negative side of the ledger, with American Airlines down 7.97%, Delta Air Lines falling 7.38%, and United Airlines 7.57% weaker.

Low-cost aviation plays were also in the red, although to a lesser degree, with Southwest Airlines down 4.17% and Spirit Airlines off 4.16%.

Discount voucher giant Groupon closed down 3.34% after it announced overnight that Kedar Deshpande would be its new chief executive officer.

Deshpande has spent the last decade in a number of roles at online footwear retailer Zappos, which itself is owned by Amazon.

GlobalFoundries reversed earlier gains to fall 4.3%, despite the semiconductor maker reporting a 56% rise in third quarter revenue as it benefitted from a higher price environment as a result of the global chip shortage.

Dow Jones - Risers

Johnson & Johnson (JNJ) $158.08 1.38%
Procter & Gamble Co. (PG) $146.40 1.26%
Amgen Inc. (AMGN) $200.80 0.97%
3M Co. (MMM) $170.81 0.41%
Cisco Systems Inc. (CSCO) $55.03 0.35%
Unitedhealth Group Inc. (UNH) $444.31 0.03%
Honeywell International Inc. (HON) $230.94 0.00%
Dowdupont Inc. (DWDP) $30.52 0.00%
Home Depot Inc. (HD) $400.42 -0.05%
International Business Machines Corporation (CDI) (IBM) $117.06 -0.15%