By Nathalie Voit
Leading U.S. stock futures lost ground Monday morning amid virus concerns and news that Sen. Joe Manchin (D-WV) would not support President Joe Biden’s “Build Back Better” plan.
The Dow Jones shed over 630 points, or 1.80%, to settle near 34,730, driven by major losses in Boeing and Southwest Airlines, who posted new 52-week lows. The S&P 500 and the Nasdaq Composite declined 1.70% and 1.83% as of 1:30 p.m. ET, respectively. Meanwhile, the small-cap Russell 2000 slid 2.62%.
Banking stocks traded low on Dec. 20, with Goldman Sachs down 3.76% and Wells Fargo down more than 3%. JPMorgan and Bank of America were both off by about 2.67%.
On the energy front, Devon Energy fell 4.53% and Occidental Petroleum over 4.5% as oil prices plummeted amid Omicron’s spread. Exxon Mobil was also down 2.22%. BP PLC sild about 3%.
General Electric, Caterpillar, and Booking Holdings stocks also sold off on Monday, with the energy tech company posting over 2% negative growth and Caterpillar and Booking Holdings down 3.70% and around 1.50%, respectively. Multi-brand restaurant operator Darden Restaurants also slipped over 2% Monday as of 1:30 p.m. ET.
Major averages are reeling from fresh concerns over the highly transmissible Omicron variant, which has already been detected in 43 states, according to the CDC. The strain has also been identified in 90 countries, with the number of cases doubling in 1.5 to 3 days in areas with community transmission, the World Health Organization (WHO) said Dec. 18.
Adding to the losses are fears about the prospects of tighter monetary policy, with Fed officials signaling three rate hikes in 2022 amid “alarmingly high inflation.”
Investors are also wary over news of Sen. Manchin’s opposition to the $1.75 billion “Build Back Better” bill.
“I’ve done everything humanly possible,” Sen. Manchin revealed in an interview with Fox News Sunday on Dec. 19, stating he could not support the legislation over worries about inflation, the national debt, “geopolitical unrest,” and the global pandemic.
White House Press Secretary Jen Psaki released a statement over the weekend in response to the news, calling Sen. Manchin’s comments “a sudden and inexplicable reversal in his position” and vowing to forge ahead with the legislation next year.
“If worries about the spread of Omicron abated, stock markets would probably recover some of the ground they’ve lost recently,” said markets economist for Capital Economics Thomas Mathews.
“But given the prospect of less supportive monetary and fiscal policy, and how far equities have already come, we wouldn’t expect this to mark the beginning of another sustained rally, either,” Mathews added, according to MarketWatch. “Instead, we expect fairly underwhelming returns from equities over the next couple of years.”
