January 23, 2022

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Dow dives 650 points after Powell’s omicron, inflation warning

U.S. stocks finished in the red on Tuesday after Federal Reserve Chair Jerome Powell warned the omicron variant could result in a faster path to tapering. 

The Dow Jones Industrial average tumbled over 650 points, or 1.8%, while the S&P 500 and Nasdaq Composite slipped 1.9% and 1.5%, respectively. 

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 34483.72 -652.22 -1.86%
SP500 S&P 500 4567 -88.27 -1.90%
I:COMP NASDAQ COMPOSITE INDEX 15537.690666 -245.14 -1.55%

Powell told members of Congress that the omicron variant could mean policymakers may need to speed up the pace of previously outlined tapering plans. He also noted the U.S. will get a clearer picture on the variant in about ten days. 

On inflation, he said removing the word “transitory”, a frequent description used by the Fed, now makes sense. 

“I think you what you’ve seen, is you’ve seen our policy adapt and you’ll see it continue to adapt to we will use our tools to make sure that higher inflation does not become entrenched,” he said. 

COVID-19 OMICRON VARIANT: HERE’S WHAT WE KNOW

Tuesday’s reversal follows Monday’s rebound from last Friday’s selloff, where investors did some bargain hunting.

Ticker Security Last Change Change %
MRNA MODERNA, INC. 352.43 -16.08 -4.36%
PFE PFIZER INC. 53.73 +1.33 +2.54%
BNTX BIONTECH SE 351.74 -10.78 -2.97%
JNJ JOHNSON & JOHNSON 155.93 -3.82 -2.39%
REGN REGENERON PHARMACEUTICALS, INC. 636.53 -17.87 -2.73%

In stocks, vaccine makers remain front and center. Moderna’s CEO, in an interview with the Financial Times, said that current vaccines for COVID-19 will likely be much less effective against the new omicron variant. 

Additionally, Regeneron shares fell after disclosing its COVID cocktail may be less effective against the variant. And Pfizer told FOX Business:

“Pfizer and BioNTech are remaining vigilant and constantly conducting surveillance efforts focused on monitoring for emerging variants that potentially escape protection from our vaccine. We are beginning to run neutralization tests on the new Omicron variant of concern and expect to have initial data in the coming weeks.”

Ticker Security Last Change Change %
WBA WALGREENS BOOTS ALLIANCE, INC. 44.80 -1.28 -2.78%
MCK MCKESSON CORP. 216.76 -6.04 -2.71%

In deal news, Walgreens Boots Alliance agreed to buy the remaining 30% stake in McKesson Corporation’s German healthcare unit GEHE Pharma Handel (GEHE) and Alliance Healthcare Deutschland (AHD). 

And Adobe’s latest stats on Cyber Monday were updated Tuesday and shoppers spent $10.7B a drop of 1.4% compared to the same period a year ago. 

Ticker Security Last Change Change %
AMZN AMAZON.COM, INC. 3,507.07 -54.50 -1.53%
WMT WALMART, INC. 140.63 -2.00 -1.40%
TGT TARGET CORP. 243.84 -5.32 -2.14%
KSS KOHL’S CORP. 51.23 -2.09 -3.92%

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On the economic data front, the S&P CoreLogic Case-Shiller showed the 20-city index jumped 1.0% in September, lagging August’s 1.2% increase and below the 1.2% Refinitiv estimate. However, year-over-year gains remained robust rising 19.1%, the fourth largest jump on record. 

The Institute for Supply Management’s Chicago Purchasing Managers’ index for November, a closely watched gauge of Midwest business activity, dipped to 61.8 far below the 68.4 in October as supply shortages continue to hinder growth.  

The Conference Board reported a dip in its reading to 109.5 after a surprise increase to 113.8 in October as COVID concerns hit sentiment. 

 Singapore led Asia’s losses, dropping 2.5%, while South Korea’s Kospi lost 2.4% to 2,839.01. Japan’s benchmark Nikkei 225 closed 1.6% lower at 27,821.76, as pessimism over the omicron variant set in. Australia’s S&P/ASX 200 gained 0.2% to 7,256.00. Hong Kong’s Hang Seng dipped 1.6% to 23,475.26, while the Shanghai Composite was nearly flat at 3,563.89.