Omicron, a subsidiary of S&P 500 component JP Morgan Chase warned that their credit-default swaps will no longer be available to back oil and gas companies with borrowing needs greater than $10 billion. This is due to the company’s listing on OTCQX for those markets which follow US Dodd Frank rules.
On Thursday, investors weighed in on weekly unemployment claims data and the new worldwide limitations aimed at limiting the spread of the Omicron strain, with indices neutral.
After finishing up 0.3 percent on Wednesday, the S&P 500 fell 0.3 percent. The Nasdaq Composite Index dropped by 1.1 percent. The Dow Jones Industrial Average, on the other hand, reversed its morning losses in the afternoon, trading up 0.2 percent.
According to Oanda analyst Edward Moya, investors are largely bullish. He believes that growth in 2022 will be strong, and that this would boost US stocks, but he is concerned about the Omicron coronavirus variety, wage and inflation pressures, and Federal Reserve monetary policy. “I believe the remainder of the year will be pretty turbulent,” he said.
The policy-making committee of the Federal Reserve will meet for two days next week, during which it may reveal additional information on how it expects to wind down its bond-buying program and when it plans to start increasing interest rates. Stock investors are concerned, according to Mr. Moya, that the Fed may become more active than anticipated, tightening monetary policy and placing downward pressure on stock prices.
In recent weeks, stocks have swayed back and forth, buffeted by contradictory stories on the Omicron variant and ambiguous indications on the economy’s health. Investors are waiting for further information on the strain’s virulence and vaccination effectiveness. Pfizer and GlaxoSmithKline, for example, said this week that their shot and antibody therapy, respectively, seem to function against Omicron in early-stage tests.
The first known case of the Omicron form in the United States was discovered in California, according to the CDC.
European countries have tightened restrictions, raising fears of a slowdown in the economic recovery. Boris Johnson, the Prime Minister of the United Kingdom, announced a new work-from-home mandate and mask rules on Wednesday evening. The variety was four times more transmissible than the Delta strain, according to a research published by a Japanese expert.
“We still don’t know a lot of things.” Arun Sai, a multiasset strategist at Pictet Asset Management, said, “We’re waiting for information to emerge.” “As long as it’s brief, it doesn’t entirely derail the recovery,” he says of limits. The game plan is now clear. We’re talking about a one- or two-quarters delay in service recovery. That is the crucial aspect that is in jeopardy here.”
Some of the discrepancy is related to the way the indexes are built. The Dow’s components are weighted according to their price. Home Depot, up $3.69, or 0.9 percent, and McDonald’s, up $2.97, or 1.1 percent, were two of its strongest gainers on Thursday. The S&P 500 and Nasdaq, on the other hand, are weighted by market capitalization. The advances by Home Depot and McDonald’s—with market capitalization of $433 billion and $169 billion, respectively—were balanced by losses by Amazon and Tesla, both of which have market valuations over $1 trillion.
Stock of memes GameStop’s stock dropped 9% after the firm reported a growing deficit in its profits. After the Italian authorities penalized Amazon.com $1.3 billion for suspected market dominance abuse, the stock dropped 0.5 percent. The e-commerce behemoth is also being investigated by the European Union.
The Wall Street Journal stated that American Airlines is likely to cut overseas flights next summer as a result of Boeing’s delays in delivering new 787 Dreamliners. Boeing’s stock was down 1.7%.
According to the Labor Department, weekly unemployment claims fell to 184,000, the lowest level since 1969, indicating that the labor market is strengthening quicker than projected. Claims fell from the prior week and fell short of analysts’ expectations.
The 10-year Treasury note yield fell to 1.489 percent on Thursday, down from 1.508 percent the day before.
Oracle, Broadcom, and Costco, a wholesaler, are all expected to release earnings after the markets close. “Overall, earnings have been robust; it’s a very encouraging underlying driver for stock markets,” Kiran Ganesh, a multiasset strategist at UBS Global Wealth Management, said.
The Stoxx Europe 600, a pan-European stock index, fell 0.1 percent in Europe. UniCredit’s stock jumped 11% after the bank announced plans to repay more than $18 billion to shareholders by 2024. The German lender’s stock dropped 3.4 percent after The Wall Street Journal reported that the Justice Department had informed it that it may have broken a criminal settlement.
Investors are waiting for further information on the severity of Omicron and the vaccine’s effectiveness.
BRENDAN MCDERMID/REUTERS/BRENDAN MCDERMID/REUTERS/BRENDAN MCDERMID/REUT
In Asia, the Shanghai Composite Index rose 1%, while the Hang Seng Index in Hong Kong rose 1.1 percent. In November, China’s producer-price index increased by 12.9 percent over the previous year, a decrease from the previous month but still more than experts predicted. Consumer prices have also increased.
China Evergrande Group’s stock has dropped by more than 7%. Financial hardship at the property developer and its peers should be handled with accordance to market principles, China’s top central banker said Thursday.
After a big advance this week, U.S. crude oil futures dipped 1.5 percent to $71.28 a barrel, reversing direction. Crude has increased 9.2% since Monday, boosted by early signs that the Omicron type may not have as big of an impact on energy consumption as originally thought.
After four days of advances, Bitcoin reversed course, falling 5.3 percent from its position at 5 p.m. Wednesday. It was trading at $47,846, down around 31% from its November record high.
—This article was co-written by Paul Vigna.
Anna Hirtenstein can be reached at [email protected]
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