Mid-day: Dow loses big after Powell’s comments shake traders
By Joseph Toppe
18:05, 30 November 2021
US shares are sinking during Tuesday trading after Federal Reserve Chairman Jerome Powell suggested policymakers should wrap-up the central bank’s monthly asset purchases.
Halfway through the session, the Dow Jones Industrial Average was almost 630 points lower, the S&P 500 was off by 1.8% and the Nasdaq Composite was 1.9% lower.
The small-cap benchmark Russell 2000 was down 2.5%.
At the close of Monday’s session, the Dow Jones Industrial Average was 297 points higher, or 0.8%, to about 35,200, the S&P 500 index was up 71 points, or 1.6%, to around 4,665, and the Nasdaq Composite Index was 313 points better, or 2%, to near 15,802 and a session high.
What did Powell say?
In his first public remarks since the Omicron strain’s discovery, Fed Chair Jerome Powell flagged significant downside risks to both employment and economic activity, which markets have interpreted as a signal for an easy-for-longer policy stance.
Analysts are also assessing the economic risks arising from the new variant, and some of them are already expecting a slowdown in the pace of US monetary policy normalisation.
What is your sentiment on US30?
Winners and losers: Travel stocks bottom out in wake of Omicron
A day after shares for Moderna spiked 12%, stock in the vaccine-maker was down almost 7% Tuesday. The shares are falling after CEO Stephane Bancel said he expects existing vaccines to be less effective against the new variant.
Also, in the wake of the Covid-19 variant, Omicron, travel shares are plummeting on Tuesday.
By mid-day, shares for Expedia Group were 3.8% lower, shares for Norwegian Cruise Lines had sunk 5.4%, and shares for American Airlines were down 4%.
Oil: Crude prices track biggest monthly drop since 2020
Oil futures are lower on Tuesday and on pace for their worst monthly drop since March of last year.
West Texas Intermediate crude for January delivery, sank $2.85, or 4%, to $67.11 a barrel on the New York Mercantile Exchange, while the global benchmark January Brent crude fell $2.70, or 3.7%, to $70.65 a barrel on ICE Futures Europe, trading around 15% lower for the month.
February Brent was down $2.75, or 3.8%, at $70.42 a barrel.
Oil stocks are also down with Occidental Petroleum losing 2.6%, Marathon Oil dipping 3.6% lower, and APA Corp. shedding 4.7%.
Gold: Precious metal is down again
Powell’s comments also sent gold prices lower on Tuesday.
The most active February gold contract went down $13.30, or 0.8%, to $1,771.90 an ounce, after trading went up to $1,811.40 during the session.
In other metals, the most-active March silver contract was down 8.7 cents, or 0.4%, to $22.765 an ounce, while March copper was 2.7% in the red to $4.267 a pound.
January platinum was off by 3.8% to $927.60 an ounce and March palladium was down 4.4% to $1,710 an ounce.
Forex: US dollar loses more ground on Euro
On Tuesday, one US dollar equals 0.88 of the euro, 0.75 of the pound sterling, 0.92 of the Swiss franc, and 1.28 of the Canadian dollar.
The 10-year Treasury yield sank beneath 1.45%, losing five basis points to 1.47% (1 basis point equals 0.01%).
The benchmark yield was as high as 1.69% last week before Friday’s drop below 1.5%.
Read More: Omicron crushes Fed rate expectations: What is next for USD?
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