Stocks give up big gains after CDC confirms Omicron in US

A development about the Omicron virus variant has seen the US stock market once again take a battering.

A development about the Omicron virus variant has seen the US stock market once again take a battering.

The US stock exchange dropped late Wednesday local time (Thursday morning AEDT) after the Centres for Disease Control and Prevention (CDC) announced the Omicron variant had been found in America.

The Dow Jones Industrial Average, which earlier had been up by more than 500 points, by midafternoon was up by about 100 points, or about 0.3 per cent, reports the New York Post.

The tech-heavy Nasdaq followed a similar path after the CDC said Omicron had been identified in a fully vaccinated person in California who had recently travelled to South Africa.

Before the CDC’s announcement further darkened the day’s trading tone, the Dow had already begun to pare some of its earlier gains when South Africa reported nearly twice as many new Covid-19 cases on Wednesday compared with Tuesday.

The moves come after Tuesday’s sell-off left the Dow 650 points lower as investors fretted over fears that Covid-19’s new Omicron variant could wreak fresh havoc on the world economy.

Federal Reserve Chairman Jerome Powell helped accelerate the losses on Tuesday after he warned that the central bank will still likely discuss hastening the tapering of its bond-buying program at its December meeting, despite new threats posed by the Omicron variant.

The confirmation of a US case of Omicron has seen investors panic. Picture: MarketWatch

“At this point, the economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases … perhaps a few months sooner,” Mr Powell told politicians on Tuesday. “I expect that we will discuss that at our upcoming meeting.”

The Omicron variant has been found in 20 countries including Australia.

The emergence of the new variant has spurred countries around the world to implement travel restrictions once again.

However, public health experts are split on the effectiveness of such measures and whether it’s the right course of action.

The Nasdaq index is in the red zone.

Little remains known about the new variant, with some warning that it’s likely to reduce the effectiveness of the currently available vaccines and medications while others point to signs that it may lead to less severe sickness while being more transmissible.

The uncertainty has thrown investors into a frenzy as they try to figure out how to position themselves on the current state of the pandemic.

Richard Saperstein, chief investment officer at Treasury Partners, said stock prices “will likely continue to deflate until there is more certainty about vaccine efficacy against the new variant and the vaccine’s overall ability to be quickly updated to address future mutations”.

The new variant is causing havoc in the stock market. Picture: Spencer Platt/Getty Images/AFP

“Market volatility will be elevated due to the uncertainty of the efficacy of vaccines and their ability to be manipulated to address disease mutations. A successful outcome of vaccine manipulation will be a significant milestone for further stock market gains.”

Ryan Detrick, chief market strategist for LPL Financial, added that Powell’s remarks from yesterday about hastening the winding down of the bond-buying program “added gasoline to the fire” of the sell-off.

Though Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said he believes “the underlying fundamentals of the economy and an upcoming robust vaccine response to the new threats will allow the market to rally back from the near-term sell-off that we are currently experiencing”.

This article originally appeared in the New York Post and was reproduced here with permission

Originally published as Stocks give up big gains after CDC confirms Omicron in US