The S&P 500 and Nasdaq stock indexes extended Monday’s losses. Despite the gains of the previous day, declines in initial jobless claims, trade deficit and industrial production led investors to take profits from stocks.
The Federal Reserve’s two-day policy meeting is likely to finish with the central bank announcing a speedier wind-down of its bond-buying program, thus U.S. equities began down Tuesday.
The S&P 500 index was down 0.4 percent on Tuesday morning. The index fell on Monday as well, dragging it down from a record high set last week. The Nasdaq Composite Index, which is centered on technology, dipped 1%, while the Dow Jones Industrial Average rose 0.3 percent.
When the Fed closes its meeting on Wednesday, investors will be looking to see whether the increase in Covid-19 cases and the new Omicron version affects how soon the Fed will wind down its easy-money policies that have fueled this year’s market surge. To combat inflation, the central bank is likely to act more rapidly to wind down its bond-buying program and hint that interest rates will be raised next year.
“The market is facing some challenges,” Hani Redha, a portfolio manager at PineBridge Investments, said. “In the lead-up to this, things had been quite aimless. The market is looking for assurances about what they’re going to do.”
Mr. Redha noted that the new variety is likely to stifle global economic recovery as some nations take steps to restrict its spread, but it is also likely to prolong labor shortages and supply-chain concerns that have fueled inflation.
Omicron seems to be more resistant to contemporary vaccinations than older Covid versions, according to numerous investigations.
GameStop and AMC Entertainment, two meme-related companies, rebounded from early losses, recovering roughly 7% and 4%, respectively. Last week, both firms released news that damaged their stock values, with GameStop reporting a wider quarterly loss and AMC revealing that its CEO and CFO had sold a combined $10.2 million in shares.
Tesla shares fell 1.5 percent on Monday as CEO Elon Musk sold additional stock. After Mr. Musk tweeted early Tuesday that Tesla will make select products available for purchase using the cryptocurrency, Dogecoin soared as much as 40%.
The yield on the benchmark 10-year Treasury note increased to 1.443 percent from 1.423 percent on Monday in bond markets. Yields and prices move in opposite directions.
Brent crude futures, the worldwide benchmark for oil, fell 1.5 percent to $73.30 a barrel. The development of Omicron, according to the International Energy Agency, would “temporarily impede, but not upend, the rebound in oil demand.”
Investors are studying the Fed’s easy-money policies to see how soon they will be phased out.
Bloomberg News/Bloomberg News/Michael Nagle
The Stoxx Europe 600 index dipped 0.2 percent in Europe. Rentokil Initial’s London-listed shares fell 9% after the pest-control business said on Tuesday that it will purchase Terminix Global Holdings for $1.3 billion in cash and 643.3 million new Rentokil shares in a transaction worth $6.7 billion. Terminix’s stock increased by 25%.
Vifor Pharma’s stock soared almost 12% after its board of directors recommended that shareholders accept a $11.7 billion offer from Australia’s CSL. Ocado, an online grocer, increased by 9% after reporting robust fourth-quarter demand and the victory of a patent lawsuit in its favor. After competitor Altice raised its investment in the British telecom business, BT shares fell 5%.
Asia’s major market indices ended the day down. The Hang Seng in Hong Kong fell 1.3 percent, while the Nikkei 225 in Japan fell 0.7 percent. The Shanghai Composite and the Kospi in South Korea both fell by roughly 0.5 percent.
Caitlin Ostroff and Anna Hirtenstein can be reached at [email protected] and [email protected], respectively.
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