Stocks Tumble as Fed Minutes Confirm Rate Hikes Are Coming

Stocks Tumble as Fed Minutes Confirm Rate Hikes Are Coming

The Dow Jones Industrial Average fell to its lowest closing level in more than two weeks, while the S&P 500 posted its biggest three-day percent drop since Sept. 30, as the fast-spreading omicron variant of COVID-19 raised fresh questions about the global outlook.

Stocks fell Wednesday after the minutes from the last FOMC meeting confirmed that the Federal Reserve will begin raising interest rates as its own concerns about inflation grow.

The Dow Jones Industrial Average declined 393 points, or 1.1%, after being in the green before the Fed released the minutes from its December meeting. The S&P 500 fell 1.9% after being flat most of the day.

Total shares volume turnover on U.S. exchanges stood at 10.22 billion shares, up from yesterday’s 10.16 billion shares. Declining stocks outnumbered advancing ones on the NYSE exchange by 2760 to 645 and 130 closed unchanged. In the NASDAQ, 948 issues advanced, 3844 issues declined, and 205 issues unchanged.

All 11 major S&P 500 sector indexes declined, with bottom performing issues were real estate (down 3.22%), information technology (down 3.13%), communication services (down 2.94%), and consumer discretionary (down 2.64%).

Worries about omicron sapped some of the joy out of the market for bullish investors, with lockdowns in parts of Europe weighing on sentiment.

News that President Joe Biden’s signature $2 trillion spending plan appeared doomed also was greeted with selling. Sen. Joe Manchin, D-W.Va., said on Sunday that he cannot support it—potentially handing Biden and Democrats a major political loss.

Prompted by the political wrangling, a team led by Jan Hatzius, chief U.S. economist for Goldman Sachs, downgraded its U.S. growth forecast for 2022, citing difficulties in getting the spending bill passed.

Declines in all three major stock-market indexes followed losses last week, which came as Federal Reserve officials sped up their reduction of monthly bond purchases and penciled in three interest-rate hikes next year.

The S&P 500 fell 3.01% over the past three days, as of Dec. 20, making it the worst decline over a three-day span since September. The Nasdaq Composite has also tumbled 3.76% over the past three days, marking the worst three-day stretch since May.

The omicron variant is raging across the world as the winter holiday season approaches. U.S. cases are jumping into year-end with more than 156,000 reported on Friday, according to data from the Centers for Disease Control and Prevention.

The strain has been found through testing in 43 out of 50 U.S. states and around 90 countries, and the number of cases is doubling in 1.5 to 3 days in areas with community transmission, according to the World Health Organization.

Caterpillar, Boeing, and General Electric all lost ground on Monday. The aircraft maker was off by about 2.2%. Caterpillar and General Electric fell 2.9% and 1.5%, respectively.

Reopening plays were among the biggest losers once again on Monday. Las Vegas Sands shed 3.6%. Alaska Air Group and Southwest fell nearly 1.4% and 0.7%, respectively. Darden Restaurants also lost close to 1.3%. 

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