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Stock indexes were climbing Wednesday morning, following the previous session’s selloff, which was partly triggered by expectations for faster Federal Reserve tapering as well as worries surrounding the omicron variant of coronavirus.
How are stock-index futures trading?
-
The S&P 500 index
SPX,
+1.43%
rose 44 points, or 1%, to 4,612. -
The Dow Jones Industrial Average
DJIA,
+1.05%
traded 213 points, or 0.6%, higher to 34,697. -
The Nasdaq Composite Index
COMP,
+1.46%
advanced 168 points, or 1.1%, to reach 15,703.
On Tuesday, the Dow industrials dropped 652.22 points, or 1.9%, to 34,483.72. The S&P 500 fell 88.27 points, or 1.9%, to 4,567, while the Nasdaq Composite declined 245.14 points, or 1.6%, to 15,537.69. The Russell 2000 index
RUT,
slid 1.9% to 2,198.91, just shy of a close of 2,198.47 that would have put it in correction territory, defined as a fall of at least 10% from a recent peak.
What’s driving the markets?
Another day, another attempted rebound for the market after a selloff connected to concerns about the impact of the omicron variant of coronavirus that causes COVID-19.
Wednesday’s move comes after stocks sank Tuesday, following Moderna
MRNA,
CEO Stéphane Bancel’s expression of doubts about extant vaccines against the omicron variant, which the World Health Organization on Friday designated as a variant of concern because they fear it may be more transmissible and harder to immunize against due to the mutations in its so-called spike protein.
Read: ‘Don’t freak out’: Omicron is bound to disrupt supply chains. The question is, how bad will it be?
The second whammy for stocks came after Federal Reserve Chairman Jerome Powell spoke of speeding up the tapering process, given a “very strong” economy and “high” inflation pressures. He made the comments to the Senate Banking Committee on Tuesday where he appeared alongside Treasury Secretary Janet Yellen.
Analysts said the market will remain laser focused on updates over the omicron variant, with data expected over the next two weeks or so.
“While Powell decided to retire the phrase transitory when discussing inflation, the fact is that this latest variant runs the risk of ensuring this current hawkish tone is in itself somewhat temporary in nature,” said Joshua Mahony, senior market analyst at IG, in a note to clients.
“With the risk of future lockdowns and economic closures, comments from the Fed and BOE should be taken with a pinch of salt given how much they could change once we find out the full extent of this variant,” said Mahony.
The U.S. is reportedly set to announce further travel restrictions this week, among them a requirement that all incoming air travelers be tested for COVID within a day of their flight. Details are being completed ahead of a planned speech from President Joe Biden on Thursday, where he is expected to detail the country’s plan to control the pandemic this winter.
Meanwhile, the market was parsing data, with private payrolls in the U.S. rising by 534,000 in November, according to the ADP National Employment Report released Wednesday. Economists polled by The Wall Street Journal had forecast a gain of 506,000 private-sector jobs in November. That said, the November figures are below the 570,000 number in October.
The ADP results come ahead of the closely watched November payrolls data that will be released on Friday.
Looking ahead, investors also will be following the release of the Institute for Supply Management manufacturing index for November and October construction spending, both at 10 a.m.
Powell and Treasury Secretary Janet Yellen will make a second Capitol Hill appearance together on Wednesday and the Fed’s Beige Book of economic conditions is coming at 2 p.m. Eastern.
Crude oil was also rebounding strongly from a sharp selloff on Tuesday. January West Texas Intermediate crude climbed 4.5% to $69.12 a barrel, while global benchmark Brent
BRN00,
jumped 4.9% to $72.64 a barrel. Goldman Sachs strategists said the oil market reaction has been “excessive” in relation to the omicron variant.
Which companies are in focus?
- Groupon Inc. GRPN announced Wednesday that it has named Zappos veteran Kedar Deshpande to be the company’s next chief executive. Deshpande spent the past decade at Zappos in a variety of roles, including as CEO.
-
Shares of GlobalFoundries
GFS,
-0.78%
were rising Wednesday after the semiconductor fabricator, benefiting from the continuing global chip shortage, reported a 56% jump in third-quarter revenue.
How are other assets trading?
-
Gold futures
GC00,
+0.75%
rose 0.6% to $1,785 an ounce. -
The Stoxx Europe 600
SXXP,
+1.10%
rose 1.1% and London’s FTSE 100
UKX,
+0.99%
rose 1.3%. -
In Asia, the Shanghai Composite
SHCOMP,
+0.36%
rose 0.3%, while the Hang Seng Index
HSI,
+0.78%
gained 0.7% and Japan’s Nikkei 225
NIK,
+0.41%
rose 0.4%.
