4:05pm: US equities close lower after gains
US stocks closed lower as investors remained cautious about how the Omicron variant will affect the economy.
Monday’s retreat followed a strong week on Wall Street as investors shrugged off a hot inflation reading of 6.8%.
Last week, the S&P 500 notched its best week since February and a fresh record close, rebounding from a big sell-off triggered by fears of Omicron. The blue-chip Dow gained 4% last week, breaking a four-week losing streak with its best weekly performance since March.
On the day, the DJIA fell by 319 points, or 0.89%, to 35,652 and the S&P 500 decreased 0.91% to 4,669.
The tech-heavy Nasdaq dropped 1.39% to 15,413.
12.05 pm: Dow sheds more than 300 points
US stocks were lower in noon trading as investors nervously await the Federal Reserve policy decision on Wednesday while also assessing the economic impact of the Omicron variant.
At midday, the Dow fell 320 points to 35,651, while the S&P 500 eased 36 points at 4,676 and the tech-heavy Nasdaq slipped 206 points to 15,424.
“We believe markets can continue take a higher inflation reading in their stride, though additional volatility remains a risk,” UBS Global Wealth Management chief investment officer Mark Haefele said.
“With Fed policy staying relatively accommodative, the backdrop for equities is still positive, and we favor winners from global growth,” Haefele added.
Notable movers included shares of Pfizer Inc (NYSE:PFE), which climbed more than 5% after the pharma giant said it has agreed to acquire Arena Pharmaceuticals Inc in a US$6.7 billion cash deal to expand its cancer and inflammatory disease treatment pipeline.
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9.45am: US stocks start lower
US stocks started the week a shade lower as traders turn to this week's Fed policy meeting, which is expected to see the central bank announce the speeding up of stimulus tapering. They were also mulling the latest pandemic developments.
In early deals in New York, the Dow Jones Industrial Average lost around 67 points to stand at 35,903, while the S&P 500 shed nearly ten points at 4,702.
The tech-laden Nasdaq index shed over 29 points at 15,600.
Oil prices also took a hit as the Omicron variant fears began to kick in, with US crude (West Texas Intermediate) easing around 0.6% at US$71.23 a barrel. Brent crude fell around 0.7% to US$74.6 a barrel.
"Even milder restrictions such as working from home reduces oil demand as people no long commute to work. Omicron is spreading fast. In the UK, for example, the rate has been doubling for several days as Prime Minister Boris Johnson warned of a “tidal wave” of infections from the new strain," said Fawad Razaqzada, analyst at ThinkMarkets.com.
"At least 30 states in America have reported cases of omicron. The only positive thing about Omicron I suppose is that there hasn’t been much in the way of evidence that it is causing severe disease. That is keeping investors confident that we hopefully won’t see similar lockdowns like we did in 2020."
6.30am: US stocks seen opening up
US stocks are expected to open higher, building on Friday’s record close for the S&P 500 as investors shrugged off a surge in inflation to its highest in nearly 40 years, setting the scene for the Federal Reserve’s last policy announcement of the year.
Futures for the Dow Jones Industrial Average rose 0.3% in Monday pre-market trading, while the broader S&P 500 index added 1.31% and those for the tech-heavy Nasdaq 100 gained 0.41%.
Fed chair Jerome Powell is expected to announce an acceleration in the winding up of the central bank's quantitative easing (QE) program when the Federal Open Market Committee wraps up its two-day meeting on Wednesday as inflation concerns remain. The consumer price index (CPI) surged 6.8% year-over-year in November.
Stocks ended higher on Friday following the inflation data, which was in line with expectations. The S&P 500 closed at 4,712 points on Friday, up 44 points or 0.95%, while Dow ended 0.6% higher at 35,971 and the Nasdaq Composite saw a 0.73% surge by the end of the day, closing at 15,631.
“The hot inflation in the US will see the Fed follow through on its more hawkish rhetoric of late and speed up the tapering of its QE programme, opening the door to a rate hike next year,” commented Neil Wilson, chief market analyst for Markets.com.
“The Fed will almost certainly drop the word ‘transitory’ in relation to inflation from its statement – time to retire it as Jay Powell said. It’s also likely that the dot plots will show much more consensus around rate hikes next year – the last dot plot in September showed policymakers were split over hiking next year.
“Markets are already pricing in the Fed lifting rates 2-3 times next year so a more hawkish statement and dot plot should not create much drama.”