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U.S. Stocks Fall Sharply On Concerns About Omicron, Interest Rates

wallstreet oct03 10jan22 lt

Stocks have moved sharply lower during trading on Monday, extending the notable downward move seen to start the New Year last week. The major averages have all shown significant moves to the downside on the day.

Currently, the major averages are just off their lows of the session. The Dow is down 470.32 points or 1.3 percent at 35,761.34, the Nasdaq is down 348.44 points or 2.3 percent at 14,587.56 and the S&P 500 is down 78.25 points or 1.7 percent at 4,598.78.

Concerns about the economic impact of the Omicron variant of the coronavirus and the likelihood the Federal Reserve will raise interest rates in the near future have contributed to the continued weakness on Wall Street.

Treasury yields have moved sharply higher in recent sessions, with the yield on the benchmark ten-year note reaching its highest levels since January of 2020.

The jump in yields comes amid a more hawkish tone from the Fed, as the minutes of the central bank's latest meeting indicated it plans to accelerate monetary policy normalization.

Worries about higher rates have led to particular weakness among high-growth tech stocks, dragging the tech-heavy Nasdaq down to its lowest levels in almost three months.

The sell-off on Wall Street also comes as traders look ahead to key inflation data as well as a Senate hearing on Fed Chair Jerome Powell's renomination.

Retail stocks have shown a substantial move to the downside on the day, dragging the Dow Jones U.S. Retail Index down by 3 percent to a nearly three-month intraday low.

Significant weakness has also emerged among software stocks, as reflected by the 2.8 percent slump by the Dow Jones U.S. Software Index.

Semiconductor, transportation and computer hardware stocks are also seeing considerable weakness, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with the Japanese markets closed for a holiday. China's Shanghai Composite Index rose by 0.4 percent, while South Korea's Kospi slumped by 1 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.5 percent, the German DAX Index and the French CAC 40 Index are down by 1.1 percent and 1.3 percent, respectively.

In the bond market, treasuries are extending the substantial downward move seen last week. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.7 basis points at 1.798 percent.

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