- US futures slipped Wednesday after the Dow Jones jumped more than 500 points the previous day.
- Investors are trying to gauge the economic impact of the Omicron variant, leading to volatility in markets.
- Central banks are cutting back on their support for economies, making the outlook unusually uncertain.
US futures slipped slightly Wednesday after the Dow Jones jumped more than 500 points the previous day, with the Omicron coronavirus variant driving volatility in markets.
Investors have been scrutinizing any new information about Omicron as they try to work out its likely economic impact, leading to big falls and gains in stocks as rumors swirl and small pieces of data emerge.
The S&P 500 closed Tuesday about 1.3% off its record closing high of 4,712.02, suggesting markets are far from panicked about the threat of the variant.
US stocks rallied sharply Tuesday after falling for three straight sessions. Some analysts pointed as the driver to announcements from vaccine-makers that booster shots increase antibodies and are effective against severe illness as a catalyst.
As trading thins out in a holiday-shortened week for stock markets, investors may want to stay cautious, according to Jeffrey Halley, senior market analyst at trading platform Oanda.
“With pre-holiday liquidity tumbling, and market direction entirely dominated by headline-derived volatility, it is probably not wise to get too wedded to ‘the worst is over’ just yet,” Halley said in a note.
Europe’s continent-wide Stoxx 600 index was 0.12% higher in early trading, while London’s FTSE 100 slipped 0.14%. Official figures released Wednesday showed the UK economy grew more slowly in the summer than previously thought.
Meanwhile, investors are still coming to terms with a pivot by the world’s central banks to inflation-fighting mode, after the US Federal Reserve last week cut back its bond purchases and looks to raise interest rates last year.
Short-dated bond yields have risen sharply, but longer-dated yields have stayed relatively low. Some analysts believe this means investors think the Fed could hike rates too fast, which could trigger a recession.
On Wednesday, the yield on the key 10-year US Treasury note was down slightly to 1.481%, from around 1.65% a month earlier. Yields move inversely to prices.
Bitcoin was up 0.84% on the Coinbase exchange over 24 hours at $49,078. The cryptocurrency too has been hit by concerns about Fed tapering and Omicron, and is well below the $59,000 level it traded at roughly a month earlier.
Major US stock markets are closed Friday for the Christmas holidays.