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Investing.com — U.S. stock markets opened lower on Tuesday but were well off the lows seen by futures in the overnight session as uncertainty continued to swirl around the implications of a new dominant Covid-19 strain for the global economy and financial markets.
By 9:45 AM ET (1445 GMT), the Dow Jones Industrial Average was down 262 points, or 0.8%, at 34,874 points. The S&P 500 was down 0.6% and the Nasdaq Composite was down 0.2%.
The Dow was weighed on, and the Nasdaq supported, by the rapid change in expectations for U.S. interest rates that the news flow around Omicron has caused. Short-term interest rate futures now expect the first interest rate increase from the Federal Reserve no earlier than September, rather than in June as was the case last Thursday, before the Omicron news was discounted.
Futures had sold off heavily overnight after the Financial Times published an interview with Moderna (NASDAQ:MRNA) CEO Stephane Bancel, in which he warned of a “material drop” in vaccine effectiveness against the so-called Omicron strain. Regeneron (NASDAQ:REGN) followed up by saying that preliminary results showed that its experimental antiviral pill was also less effective against Omicron than against other variants of the disease.
Moderna stock sold off 7.5% after Bancel’s comments, while Regeneron stock was more resilient, falling only 0.7%.
However, Oxford University in England, which was behind the vaccine more commonly known as AstraZeneca (NASDAQ:AZN)’s, said there was no evidence yet that vaccines will be less effective. In addition, case numbers in South Africa, where the strain was first detected, have fallen for the last two days.
