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Wall Street is again going through a tough phase. The Dow Jones Industrial Average and the S&P 500 indices declined 3.7% and 0.8%, respectively, in November. The Russell 2000 index lost 4.3% in the month, marking its worst since March 2020.
The mood on the bourses seemed tensed on the final trading day of the month on the rising concerns over omicron strain and the possibility of the Federal Reserve increasing the pace of their tapering process. The new variant is feared to be carrying the combined features of previous variants and can have high transmissibility and lower vaccine potency.
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Moderna MRNA CEO Stephane Bancel’s comment to the Financial Times on Nov 29, claiming that he anticipates the existing COVID-19 vaccines to prove comparatively less effective against the new strain, has brought about a new wave of concerns (according to a CNBC article).
The omicron variant has now been reported in the U.K., Israel, Belgium, the Netherlands, Germany, Italy, Australia and Hong Kong. Going on, the World Health Organization (WHO) has labeled the variant as a “variant of concern.” At least 70 countries and territories are believed to have put travel restrictions from several African countries to control the outbreak, per a CNN report.
Federal Reserve Chair Jerome Powell further dented the market sentiments by mentioning that the central bank will be discussing speeding up the tapering process from the $15 billion-a-month schedule decided previously, per a CNBC article. This move might be taken to control the persistently high inflation levels, given that the U.S. economy is strongly recovering from the pandemic-led slump.
Commenting on the current market scenario, Gregory Daco, chief U.S. economist at Oxford Economics, has said that “Markets appear to be having trouble digesting the combo of elevated uncertainty around the impact of the Omicron variant and a hawkish Fed pivot in the context of persistently elevated inflation.” This was stated in a CNBC article.
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