S&P 500 retreats from file to begin the week, Dow sheds greater than 200 factors

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Traders operate on the floor of the New York Stock Exchange (NYSE) in New York City on December 8, 2021.

Spencer Platt | Getty Images

The S&P 500 pulled back on Monday as investors remained cautious about how the Omicron variant will affect the economy and what the Federal Reserve will announce on Wednesday.

The S&P 500 fell 0.6% and is about 1.2% off its intraday record. The Dow Jones Industrial Average was trading 250 points lower, dragged down by a 3.5% decline in Boeing stock. The technology-oriented Nasdaq Composite lost 0.9%.

The reopening of games like airlines and cruise lines were among the biggest losers on Monday. American Airlines lost 4.9% and Delta Air Lines lost 3.3%. Carnival Corp. traded 5.1% lower.

On the positive side, Moderna stock rose 5.9% a day after White House leading infectious disease expert Dr. Anthony Fauci, described Covid booster vaccinations as “optimal care” but said the definition of fully vaccinated would not change.

Israeli researchers at Sheba Medical Center and the Department of Health’s Central Virology Laboratory concluded on Saturday that the three-shot course of the Pfizer-BioNTech Covid-19 vaccine was effective against the new Omicron variant. Pfizer stock was up 4%.

Still, the new variant has got some government officials to reintroduce health restrictions to slow the spread. On Sunday, the U.S. neared 800,000 coronavirus-related deaths. British Prime Minister Boris Johnson confirmed on Monday that at least one patient infected with the Omicron variant has died in the country.

“The concerns are huge… from a market that recently recovered quickly to record highs to ongoing Covid worries. But the elephant in the room today, and maybe in the next few days, will be the Federal Reserve and how hawkish a tone is. “Adopt it later this week,” said Jim Paulsen, chief investment strategist for the Leuthold Group.

Monday action followed a strong week on Wall Street as investors shook off a hot inflation reading. The S&P 500 saw its best week since February and a new record close after recovering from a large sell-off sparked by fears of the Omicron variant of the coronavirus. The blue-chip Dow was up 4% last week, breaking a four-week losing streak in its best weekly performance since March.

Investors digested a surge in headline inflation data, which rose 6.8% yoy in November, its largest increase since 1982. The pressure was slightly above the Dow Jones estimate of 6.7%.

“We believe that the markets can continue to accept higher inflation rates, although additional volatility remains a risk. With Fed policy remaining relatively accommodating, the environment for equities is still positive and we prefer winners from global growth, ”said Mark Haefele, chief investment officer, UBS Global Wealth Management.

The key inflation data came ahead of the Federal Reserve’s two-day monetary policy meeting this week, when policymakers are expected to discuss an accelerated end to their bond purchase program.

Fed chairman Jerome Powell and a parade of Fed speakers recently suggested the central bank could stop the monthly bond purchase program of $ 120 billion in rate hike plans that could scare investors.

“With the Fed’s initial tightening imminent, investors are giving up anything but risk-free assets, including defensive sectors within the equity market, large caps, bonds and the safe haven of the US dollar,” added Paulsen. “By the time the Fed meeting and press conference is over, investors should probably expect fears to keep the stock market under pressure.”

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