The major averages fell on Monday as investors continued to grapple with the resurgence of Covid cases spurred from the newfound omicron variant.
The Dow Jones Industrial Average dropped about 650 points, dragged down by losses in Boeing, Goldman Sachs and American Express. The S&P 500 dipped 1.7% and the technology-focused Nasdaq Composite declined 1.5%. The small-cap benchmark Russell 2000 lost 2.8%.
The omicron variant is raging across the world as the winter holiday season approaches. The strain has been found through testing in 43 out of 50 U.S. states and around 90 countries, and the number of cases is doubling in 1.5 to 3 days in areas with community transmission, the World Health Organization (WHO) said on Saturday.
U.S. cases are jumping into year-end with more than 156,000 reported on Friday, according to CDC data.
Reopening plays were among the biggest losers once again on Monday. Royal Caribbean shed 3%. United Airlines and Southwest fell 3.7% and 2.3%, respectively. Darden Restaurants also lost 3.5%. Booking Holdings was down more than 4%.
The downward move in markets “reflecting growing uncertainty surrounding whether the Omicron surge will bring new widespread economic shutdowns, an unexpected shelving of additional fiscal stimulus from President Biden’s Build Back Better plan, and a breach by the S&P 500 index of its 50-day moving average,” said Jim Paulsen, chief investment strategist at the Leuthold Group.
On the political front, Sen. Joe Manchin, a conservative Democrat from West Virginia, said Sunday he won’t support the Biden administration’s “Build Back Better” plan. Manchin’s decision will likely kill the $1.75 trillion social spending and climate policy bill as it stands now.
Goldman Sachs cut its GDP forecast on the Manchin news, cutting its first quarter 2022 forecast to 2% from 3%. The firm also lowered its second quarter and third quarter growth forecasts.
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