© Reuters.
By Yasin Ebrahim
Investing.com – The S&P 500 slipped Monday, as an Omicron-fueled surge in Covid-19 cases stoked worries about the global economic recovery, sending cyclical stocks including financials sharply lower.
The S&P 500 fell 1.2%, the Dow Jones Industrial Average lost 1.2%, or 433 points, the NASDAQ slumped 1.2%.
“Omicron news is dominating the headlines in the final trading days ahead of the Christmas holiday,” Stifel said following reports that the new variant had been identified in 43 out of 50 U.S. states.
The U.S. wave of Omicron is projected to “be in the steep part of its exponential growth in 2 to 3 weeks, just as we turn the corner into the new year,”Morgan Stanley said.
Cyclical stocks, those that move in tandem with the economy, were the hardest-hit, with banking stocks leading financials lower as U.S. Treasury yields.
Synchrony Financial (NYSE:SYF), Lincoln National (NYSE:LNC), Capital One Financial (NYSE:COF) were among the biggest decliners.
Falling Treasury yields hurts the net interest margin of banks – the difference between the interest income generated by banks and the amount of interest paid out to depositors.
In another blow to the outlook on the recovery, Senator Joe Manchin rejected the Biden administration’s $1.75 trillion spending program amid concerns about adding to the national debt.
Manchin later on Monday appeared to extend an olive branch, however, hinting that he would be willing to back a less costly version of the ‘Build Back Better Plan.’
Goldman cut its forecast for GDP in the first, second, and third quarters of 2022, and said “the odds [to pass the spending bill] have clearly declined and we will remove the assumption from our forecast.”
Energy, meanwhile, struggled to cut losses as oil prices remained pressure, though bounced off their session lows.
Big tech also soured investor sentiment on stocks as Apple (NASDAQ:AAPL) , Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB), Google (NASDAQ:GOOGL), and Microsoft (NASDAQ:MSFT) ended the day in the red.
In other news, Carnival (NYSE:CCL) rose 3% shrugging off the Covid jitters after forecasting a profit in the second quarter of 2022, driven by strong advanced bookings for the second half of 2022 and 2023.
Moderna (NASDAQ:MRNA), meanwhile, gave up gains to end sharply lower despite reporting that a booster shot of its COVID-19 vaccine did appear to provide protection against the omicron variant.
Source: Investing.com
