Stocks drop as fears about the omicron variant reach Wall Street
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Fears about the omicron variant hit Wall Street hard on Monday. The Dow closed down 433 points, or 1.2%, continuing a global sell-off. As NPR's David Gura reports, investors are on edge about how this new variant will affect the global economy.
DAVID GURA, BYLINE: The Netherlands imposed a nationwide lockdown. The World Economic Forum postponed its annual gathering of executives and heads of state in Davos, Switzerland. And stocks fell worldwide. Countries and organizations are reacting to how fast this COVID variant is spreading, and that's weighing on investors. Eric Freedman is the chief investment officer in the Asset Management Group at U.S. Bank.
ERIC FREEDMAN: The biggest concern that markets have is that no one seems to have an edge on the path forward.
GURA: COVID is spreading during the busy holiday season, and investors worry restrictions could once again impact global travel and governments could impose more lockdowns. Shares in some travel companies were hit on Monday, including Southwest Airlines, along with restaurant chains. Oil fell more than 5%. This has added more uncertainty to an environment where there was already a lot of it. Investors were already concerned about surging inflation. Central banks will start to raise interest rates to fight rising prices. The Fed Reserve has said it could raise interest rates three times in 2022, which means borrowing costs would go up for companies and consumers.
FREEDMAN: What we don't know this time, in addition to, of course, the great medical considerations around a variant, is just how responsive will central banks be?
GURA: Policymakers already used a lot of ammunition during the first part of the pandemic, and it's unclear what more they could do. And the worry is the new variant could have a significant impact, shutting down travel and exacerbating problems with supply chains. But of course, we've seen this story play out in markets before. When the delta variant first emerged, markets tumbled. But then they bounced back as the economy has continued to reopen. Savita Subramanian is the head of U.S. equity and quantitative strategy at Bank of America.
SAVITA SUBRAMANIAN: The market has continued to shrug off these concerns. We've remained in this sort of reopening path.
GURA: But for now, things will be volatile. Historically, this is a quiet period for markets - just days away from Christmas and close to New Year's. It's a time when investors tend to sit on the sidelines and the amount of buying and selling isn't high. That tends to magnify volatility, making drops like Monday's seem more severe.
David Gura, NPR News, New York.
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