US Shares Fall Over Faster Taper Announcement

Stocks on Wall Street fell in early trading Tuesday, driven lower by the growing possibility the Fed may remove its supports for the economy.

Fed Chair, Jerome Powell, told a Senate committee on Tuesday that inflation was likely to persist into 2022 and that the Fed would consider tapering more quickly in response.

The S&P 500, which had been down roughly 0.5 percent for much of the morning, fell after Powell’s comments. The index was down 1.5 percent at 11 a.m., more than giving up its gains from Monday.

In midday trading, the Dow Jones Industrial Average slid 616 points, or 1.8%. The index climbed 236 points Monday to close at 35,135, paring some of the losses from Black Friday’s 900 point-plus drop—its worst day of the year. The S&P 500 declined 1.8%, and the Nasdaq Composite fell 1.9%.

Stocks began the day lower after two large biotechnology companies said their Covid-19 vaccine and treatments are unlikely to be as effective against the Omicron variant as they are against other strains, but the selloff worsened after Powell began speaking with the Senate Banking Committee.
The combination of potential economic confusion brought on by Omicron and less support to markets from the Fed could be a particularly dangerous combination for stocks.

Stocks prices were falling around the world before Powell’s testimony as investors struggled to understand the danger posed by the Omicron variant. The Stoxx Europe 600 fell 0.4 percent. In Asia, the Nikkei 225 in Japan and the Hang Seng in Hong Kong had each dropped more than 1 percent.