Wall Street's major indexes closed lower on Friday, with the Nasdaq leading the declines as investors bet that a strong jobs report would not slow the Federal Reserve's withdrawal of support all while they grappled with uncertainty around the Omicron coronavirus variant.
After opening higher, Wall Street spent the rest of the session in the doldrums and an elevated volatility index highlighted investor anxiety. The Labor Department's report, ahead of the session's open, showed that while nonfarm job growth rose less than expected in November, the unemployment rate dropped to 4.2%, its lowest since February 2020, and wages increased. Separately, a measure of U.S. services industry activity hit a record high in November. Both sets of data appeared to influence investor expectations for the Fed's next move towards tightening its policy. Fed Chair Jerome Powell said this week that the central bank will consider a faster wind-down of its bond-buying program, prompting speculation that interest rate hikes would also be brought forward. "There's not enough in the jobs report to dissuade the Fed from accelerating the taper and (it) leaves the door open for a quicker rate hike than the market might have been anticipating," said Steve Sosnick, chief strategist at Interactive Brokers (NASDAQ:IBKR). On top of this he pointed to concerns that the Omicron variant appeared to be spreading faster than Delta, the last most prevalent version of COVID-19. The number of countries reporting Omicron cases kept rising on Friday but there was still little clarity on the severity of the disease or the level of protection provided by existing COVID-19 vaccines. The Dow Jones Industrial Average fell 59.71 points, or 0.17%, to 34,580.08, the S&P 500 lost 38.67 points, or 0.84%, to 4,538.43 and the Nasdaq Composite dropped 295.85 points, or 1.92%, to 15,085.47. The S&P, the Dow and the Nasdaq all registered declines for a week in which they swung wildly from day to day as investors reacted to Omicron news and Powell's comments. The S&P's decline of 1.2% was its second weekly decline in a row while the Nasdaq fell 2.62%, also its second straight week of losses. The Dow dropped 0.92% in its fourth consecutive weekly decline. In a clear indication of investor nerves, Wall Street's fear gauge, the CBOE Market Volatility index, went above 35, in afternoon trading, for the first time since late January. It pared some gains however to close up 9.7 points at 30.67. Meanwhile the S&P sector outperformers were defensive sectors consumer staples, closing up 1.4% and utilities, adding 1%, followed by healthcare, which climbed 0.25%. By the end of the session, consumer discretionary, down 1.8%, was the biggest loser, followed by technology, which fell 1.65%. Decliners included heavyweights such as Tesla (NASDAQ:TSLA), down 6%, and Nvidia (NASDAQ:NVDA), down 4% and both Apple Inc (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) losing more than 1%. "It's hard to argue that stocks with such huge valuations are defensive," said Interactive Brokers' Sosnick. And with large cap technology stocks having avoided a recent deterioration in the broader markets, Sosnick said: "That's catching up to those stocks." The economically sensitive Dow fell less than its peers during the session while other cyclical sectors like industrials, materials also outperformed. DocuSign (NASDAQ:DOCU) Inc closed down 42% after the electronic signature solutions firm forecast downbeat fourth-quarter revenue. Declining issues outnumbered advancing ones on the NYSE by a 2.68-to-1 ratio; on Nasdaq, a 3.39-to-1 ratio favored decliners. The S&P 500 posted 11 new 52-week highs and six new lows; the Nasdaq Composite recorded 15 new highs and 682 new lows. On U.S. exchanges 13.8 billion shares changed hands compared with the 11.52 billion average for the last 20 sessions.
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Chinese companies are getting closer to being delisted by US regulators.
The US Securities and Exchange Commission adopts a rule requiring US-listed foreign companies to disclose whether they are owned or controlled by a government entity. South Africa's NICD: Epidemiological data from the country show a threefold increase in the risk of reinfection with the Omicron coronavirus variant. Fed's Barkin: Inflation readings for next year are likely to be messy. Fed's Bostic: If necessary, the Fed needs to be able to raise interest rates sooner. Fed's Bostic: Uncertainty about inflation has the potential to prolong the inflationary environment for a longer period of time. State Health Department: A case of the Omicron COVID-19 variant has been detected in Minnesota. US Senate Majority Leader Schumer: A deal on stopgap financing has been reached with McConnell. OPEC+ has agreed to proceed with the planned January oil output increase- OPEC+ Source. WTI weakened then closed higher for the day. The S&P 500 clawed back some losses Thursday, bouncing back from oversold levels following a rout a day earlier after the U.S. confirmed its first case of the Omicron variant of Covid-19.
The S&P 500 rose 1.50%, the Dow Jones Industrial Average gained 1.94%, or 660 points, the Nasdaq added 0.67%. “Yesterday's bearish reversal pushes U.S. equities into oversold territory once again and sets us up for another strong rally effort,” Janney Montgomery Scott said in a note. But there is “likely (still) more to go in this current market correction.” Financials outperformed the broader market, led by banking stocks as Treasury yields rose after some on Wall Street suggested that a potentially more contagion omicron variant could speed up the end of the pandemic and ultimately cause the yield curve to steepen “If the market were to anticipate that scenario — omicron could be a catalyst for steepening (not flattening) the yield curve, rotation from growth to value, selloff in COVID and lockdown beneficiaries and rally in reopening themes,” chief global strategist Marko Kolanovic and quant strategist Bram Kaplan wrote in a note to clients. Regional banks including Fifth Third (NASDAQ:FITB), People’s United Financial (NASDAQ:PBCT), and SVB Financial (NASDAQ:SIVB) were among the biggest gainers in financial, rising more than 5%. Industrial were also helped by a rebound in airline stocks, led by Boeing Co (NYSE:BA) China cleared the aircraft maker’s 737 Max to return to the skies on Thursday. The 737 Max returned to service in China after being grounded for more than two years following two fatal crashes. Delta Air Lines (NYSE:DAL), Alaska Air (NYSE:ALK), United Airlines Holdings Inc (NASDAQ:UAL) were also sharply higher. Energy stocks were boosted by rising oil prices after OPEC and its allies decided to stick with their current plan of lifting oil output by 400,000 barrels a day in January. On the economic front, better-than-expected weekly jobless claims data stoked optimism on the labor market recovery ahead of Friday’s monthly jobs. The Labor Department reported that 222,000 people filed for unemployment insurance, confounding economists’ expectations for an 18,000 rise. Nonfarm payrolls are expected to have increased by 560,000 in November, with unemployment rate expected to drop to 4.4%. In tech, Apple (NASDAQ:AAPL) pared some losses after the tech giant warned some its chip supplier of weaker demand for its latest iPhones, Bloomberg reported. CBO: The Treasury may run out of cash by the end of the year
UK House of Commons votes in favor of new COVID-19 rules. Fed's Powell: It's reasonable to think about wrapping up taper a few months sooner. We will talk about speeding up taper at the coming Fed meeting. Fed's Powell: It's time to say goodbye to the term "transitory" when it comes to inflation. DXY strengthened, S&P 500 weakened. Fed's Powell: The possibility of higher inflation has increased. BioNTech Founder: The Omicron variant is unlikely to cause severe illness in vaccinated people - WSJ. US Senate Majority Leader Schumer: The House may pass the stop-gap government spending bill tomorrow. The S&P 500 recovered some losses Tuesday, but remained pressured after Federal Reserve Chairman Jerome Powell signaled a more aggressive tapering of bond purchases at a time when concerns about the new Omicron variant remained front and center.
The S&P 500 fell 1.56%, but was down more than 2% at the lows of the day. The Dow Jones Industrial Average fell 1.6%, or 560 points, the Nasdaq fell 1.54%. "The economy is very strong and inflationary pressures are high, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at the November meeting, perhaps a few months sooner,” Powell said in testimony before the Senate Banking Committee. In a sign that elevated inflation could persistent for longer than expected, Powell conceded that it was “good time to retire that word [transitory].” Some, however, welcomed the change in tone on inflation from the Fed chief, and were in favor of faster taper in the wake of a surge in inflation and a strong consumer. “I think it's healthy to see Powell recognize that inflation is real, it's not just coming and going, but part of the fabric of the global economy right now,” Eric Diton, president & managing director of The Wealth Alliance told Investing.com in an interview. “The Fed should taper [faster], I scratched my head as to why they're buying the current volume of bonds every month when we're seeing inflation, strong earnings and very strong consumer demand," he added. The update from Powell rattled risk sentiment as it arrived amid uncertainty about the impact of the Omicron variant of coronavirus on the economy. Moderna (NASDAQ:MRNA) chief executive Stéphane Bancel “warned of a material drop,” in vaccine in efficacy against the Omicron variant. Communication services were the biggest decliners, with Discovery (NASDAQ:DISCA), Dish and Twitter (NYSE:TWTR) leading to the downside. Twitter Inc (NYSE:TWTR) fell more than 4% as slew of analysts on Wall Street reacted negatively to news that the Jack Dorsey had stepped down as CEO of the social media company. “We believe investors were expecting or hoping for an external candidate to take over … [with] experience that would help it reach its user growth and revenue targets, with a focus on improving ad tech,” Wedbush said in a note as it cut its price target on Twitter to $52 from $69. Energy continued to follow oil prices as fresh concerns about the impact of the new Covid variant on travel demand is likely to force OPEC and its allies to delay plans to increase production at their meeting on Thursday. OPEC+ confirming its plan to increase production is “virtually unimaginable in view of the latest market developments,” Commerzbank said in a note “In our opinion, any such decision would exert further pressure on oil prices in the current market environment, which is hardly likely to be in the interests of the OPEC+ members.” Tech outperformed relative to other sectors, down just 0.7%, underpinned by a 2% rise in Apple (NASDAQ:AAPL). “We were overdue for a correction, but I'm a buyer into it as a pullback might open up opportunities for tax loss harvesting as well as opportunities for better entry points in equities,” Diton added. Fitch: If the new variation takes hold, an increase in inflation will complicate macroeconomic responses.
WH Press Sec. Psaki: We are not reconsidering the release of oil reserves. Biden: We do not believe that additional measures are required at this time. US Energy Envoy: More oil reserve release possible - CNBC. Iran Statement on nuclear talks: There is no way to return to the 2015 agreement without a verifiable easing of all sanctions imposed on Iran since the United States withdrew. The German Incoming Government prepares for a COVID emergency brake - Stuttgarter. Jack Dorsey steps down as Twitter CEO. France's Finance Min. Le Maire: One of the priorities of France's EU presidency will be to implement a digital euro. The S&P 500 climbed Monday, shrugging off lingering worries about the impact of the new Omicron Covid-19 variant as investors piled into beaten down tech stocks following a rout last week.
The S&P 500 rose 1.51%, the Dow Jones Industrial Average gained 0.81%, or 282 points, the Nasdaq gained 2%. Big tech led the broader market rebound, with Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) rising more than 1%. Apple was up more than 2% after HSBC raised its price target on the stock as supply chain issues that weighed on the production are expected to wane. Twitter (NYSE:TWTR), meanwhile, fell more than 1% after the social media platform announced that CEO Jack Dorsey would be stepping down. Parag Agrawal, Twitter’s chief technology officer, will succeed Dorsey. The stock initially popped on the news. “I’ve decided to leave Twitter because I believe the company is ready to move on from its founders,” Dorsey said in a statement. Also helping investor sentiment, vaccine makers signaled they were preparing to adjust their current Covid-19 vaccines against the Omicron Covid variant. Moderna (NASDAQ:MRNA) said it could launch a reformulated vaccine to tackle Omicron by early next year, sending its shares more than 11% higher. Health experts have indicated that it would take about two to three weeks to learn more about the transmissibility and severity of the Omicron variant. Consumer discretionary was also among the leading sector gainers on the day, underpinned by the rise in Tesla as well as a rebound in travel and leisure stocks like Expedia (NASDAQ:EXPE), Marriott International (NASDAQ:MAR), and American Airlines (NASDAQ:AAL). Tesla (NASDAQ:TSLA) jumped more than 4% as the electric vehicle looks set to deviate from its usual strategy of ramping up deliveries in the final quarter of the year in an effort to save cost. Tesla chief executive Elon Musk told the company’s employees not to ramp-up deliveries in the third quarter, and focus on the keeping costs low, CNBC reported, citing a recent memo. Energy was also in demand as oil prices surged following their worst daily selloff on Friday, on expectations that OPEC and its allies could delay plans to increase production amid worries about the impact on demand from the new omicron variant of Covid-19. “In our view, there is much to suggest that OPEC+ will not initially step up its oil production any further. This is presumably also why oil prices today have gained by around 5%,” Commerzbank said ahead of the OPEC+ meeting on Dec. 2. In other news, Roku (NASDAQ:ROKU) added to recent losses, down 1%, even as Benchmark bucked the recent trend of negative commentary on the company from Wall Street, keeping its buy rating on the stock. "|[W]e have a markedly different view on some of the information being filtered into the marketplace," Benchmark said, citing recent upbeat channel checks. "[O]ur channel checks indicate a much healthier in-stock level of Roku TVs at both Walmart (NYSE:WMT) and Best Buy than feared, while we think a Google-Roku resolution could be in the offing even if a temporary blackout occurs." Fed's Bostic: The new variant has the potential to prolong the effects of COVID on the economy for longer than expected.
Fed's Bostic: A second rate increase might become necessary next year if the economy continues to run hotter than expected. As oil prices plummet due to the new virus variant, OPEC+ is considering abandoning its output increase. ECB's de Cos: In theory, PEPP should end in March. ECB's President Lagarde: We don't expect to need net bond purchases under PEPP in the spring based on present conditions. Shares tumbled on Wall Street on Friday as they reopened after Thanksgiving, while European stocks saw their biggest sell-off in 17 months and oil prices plunged by $10 per barrel as fears over a new coronavirus variant sent investors scurrying to safe-haven assets.
The World Health Organization (WHO) on Friday designated a new COVID-19 variant detected in South Africa with a large number of mutations as being "of concern," the fifth variant to be given the designation. Unofficially, the Dow Jones Industrial Average closed down 2.53% at 34,899.34 in its largest percentage drop in more than a year. The S&P 500 lost 2.27%, its worst one-day drop since Feb. 25, and the Nasdaq Composite dropped 2.23%, the biggest one-day route in two months. U.S. markets closed early on Friday after being shut all day on Thursday for the Thanksgiving holiday. The benchmark STOXX 600 index ended 3.7% lower on the day, leaving it down 4.5% for the week. The volatility gauge for the main stock market hit its highest in nearly 10 months. Companies that had benefited from an easing of COVID-related restrictions this year, including AMC Entertainment (NYSE:AMC), plane engine maker Rolls Royce (LON:RR), easyJet (LON:EZJ), United Airlines and Carnival (NYSE:CUK) Corp all fell. Retailers dropped as Black Friday, the start of the holiday shopping season, kicked off as the new variant fuelled concerns about low store traffic and inventory issues. In Europe, the travel and leisure index plummeted 8.8% in its worst day since the COVID-19 shock sell-off in March 2020. "Bottom line is this is showing that COVID is still the investor narrative, a lot of today’s movement is driven by the South African variant," said Greg Bassuk, chief executive officer of AXS Investments in Port Chester, New York. "We have been talking about four or five factors that have been driving the last couple of months' activity – inflation fears, some economic data, Fed policy – but what we have seen over the last year is that big developments with respect to COVID really have ended up eclipsing some of those other factors by a substantial degree and that is what is driving today’s market activity." Little is known of the variant detected in South Africa, Botswana and Hong Kong, but scientists said it has an unusual combination of mutations and may be able to evade immune responses or make the virus more transmissible. Britain said the new variant was the most significant variant to date and was one of several countries to impose travel restrictions on southern Africa. The European Commission also said it wanted to consider suspending travel from countries where the new variant has been identified, though the WHO cautioned against hastily imposing such restrictions. Global shares fell 1.81%, their biggest down day in more than a year. France's CAC 40 shed 4.8%. The UK's FTSE 100 dropped 3.6%, while Germany's DAX fell 4.2% and Spain's IBEX lost 5.0%. Malaysian rubber glove maker Supermax, which soared 1500% during the first wave of the pandemic, leapt 15%. MSCI's index of Asian shares outside Japan dropped 2.44%, its sharpest fall since late July. In commodities, oil prices plunged. Gold prices reversed earlier gains seen amid the move away from riskier assets. U.S. crude was last down 12%, at $69.02 per barrel by 1:21 p.m. EST (1812 GMT). Brent crude dropped 10.5% to $73.59. Spot gold prices were down 0.09%. As investors dashed for safe-haven assets, the Japanese yen strengthened 1.87% versus the greenback, while sterling was last trading at $1.3331, up 0.08% on the day. The dollar index fell 0.757%, with the euro up 1% to $1.1318. U.S. Treasury debt yields posted their sharpest drop since the pandemic began. Treasuries benchmark 10-year notes last rose to yield 1.4867%. The 2-year note last rose to yield 0.4941%, from 0.644%. [US/] "A flight to safety is underway with the 10-year U.S. Treasury yield down," said Keith Lerner, co-chief investment officer at Truist Advisory Services. "The proximate cause of the sell-off is yesterday’s announcement of a new COVID-19 variant in South Africa, which investors fear could weigh on economic growth." The market swings come against a backdrop of already growing concern about COVID-19 outbreaks driving restrictions on movement and activity in Europe and beyond. Markets had previously been upbeat about the strength of economic recovery, despite growing inflation fears. OPEC Panel predicts that the SPR release will increase oversupply by 1.1 million barrels per day.
Fed Minutes: Some participants preferred a slightly faster pace of reductions, resulting in an earlier conclusion to net purchases. US Consumer Spending MoM Actual 1.3% (Forecast 1%, Previous 0.6%) S&P 500 strengthened. OPEC+ weighs shift in oil policy after the US-led SPR release - Sources. OPEC+ and Gazprom are creating fake tightness in the energy markets - IEA. US GDP QoQ 2nd Estimate Actual 2.1% (Forecast 2.2%, Previous 2.0%) DXY weakened before strengthening, S&P 500 strengthened before weakening. JMMC members will meet on November 30th, OPEC on December 1st, and OPEC+ on December 2nd - 2 Sources. |
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