Ahead of a crucial Fed meeting later in the week and concerning developments of the Omicron variant, Wall Street will supposedly extend last week’s gains, the best since February.
US stocks went lower Monday as investors expect a busy week of central bank meetings and a critical Federal Reserve decision regarding tapering considering the accelerated spread of Omicron infections around Europe.
Stocks curbed earlier pre-market gains followed by a report from the UK of the death of the first patient from an Omicron variant infection.
Prime Minister Boris Johnson warned of a “Tidal Wave” of Omicron infections that will threaten the nation as he urged a faster take-up of booster shots as scientists raised the threat level amidst surging cases.
With Omicron’s threat rising, the Fed will largely accelerate the tapering of the monthly bond purchases. This is as it concludes a two-day policy meeting Wednesday and especially after Friday’s data that indicates the fastest rate of consumer price inflation since 1982. Moreover, new Fed projections on growth and inflation will likely cement market expectations of a June rate hike.
This week, the Bank of England, the European Central Bank, and the Bank of Japan will issue policy statements. The rising levels of Delta and Omicron infections will likely keep each bank from signaling stricter conditions, adding upward pressure on the US dollar.
Talking of corporate earnings, Wall Street will experience a quieter week.
- Factory gate inflation data Tuesday
- The Fed decision & retail sales November data Wednesday
- Housing and weekly jobless claims data Thursday
In the opening hours of trading,
- Dow Jones Industrial Average went 335 points lower
- S&P 500 moved 38 points lower from last week’s gain
- Nasdaq Composite dropped 175 points
The Nasdaq Composite fell as benchmark 10-year Treasury note yields dropped to 1.448%.
Apple (AAPL) – Get Apple Inc. Report tried providing some early support as the stock appears set to test the $3 trillion market cap benchmark this week, followed by a Monday price target upgrade from JPMorgan. However, it marked 0.9% lower at $178.05 each in late-morning trading.
Pfizer (PFE) – Get Pfizer Inc. Report rose 5.2% after it released its plans to buy San Diego-based biotech Arena Pharma (ARNA) – Get Arena Pharmaceuticals, Inc. Report for approximately $6.7 billion in cash. Arena jumped 84% to $91.80 each.
A UK study shows a third shot of the drugmaker’s Covid vaccine providing solid protection against Omicron, this boosted the shares, and analysts at UBS lifted their rating and price target.
Novavax (NVAX) – Get Novavax, Inc. Report shares surged 1%, followed by the drugmaker’s comment that it will file a package of data linked to its developing coronavirus vaccine with the US FDA by the year-end.
Rivian Automotive (RIVN) – Get Rivian Automotive, Inc. Class A Report, gained 0.2%, followed by all-electric Rivian R1T’s crowning as MotorTrend’s 2022 Truck of the Year by the influential magazine during the weekend.
Peloton Interactive (PTON) – Get Peloton Interactive, Inc. Class A Report shares also witnessed momentum after the at-home exercise company launched a follow-up parody ad clarifying that its Internet-connected exercise bikes do not undisputedly lead to people dropping dead.
Coming to overseas markets, Europe’s Stoxx 600 was marked 0.44% down by mid-the-close of Frankfurt trading. Tech and mining stocks were leading the session’s advance as the Asia region MSCI ex-Japan index closed out the session 0.3% lower.
US oil prices went lower, pushed down by a stronger US dollar. New OPEC data shows cartel members increase November output by 290,000 barrels a day.
The report further noted that OPEC sees global surge to 99.13 million barrels per day, by 1.11 million. This is for the first three months of the coming year; adding will likely make a “mild and short-lived” impact from the Omicron variant.
WTI futures for January delivery marked lower by 51 cents from Friday’s close to change hands at $71.16 per barrel. Brent contracts for February fell 58 cents to $74.57 per barrel.