Despite the significant challenges posed by the Omicron variant and the sustained surge in inflation, the majority of Wall Street companies predict that stock markets will continue to strengthen over the next year, albeit modestly, thanks to strong corporate earnings, solid economic growth and easing supply chain problems.
Stocks have reacted sharply and market volatility has increased since last Friday when the World Health Organization described the Covid-Omicron strain – first reported in South Africa – as a “worrying variant.”
The S&P 500 slipped over 2% on Friday, the worst day of the market in 2021, before absorbing some losses on Monday after President Joe Biden said there was “no need” for new locks in response to the Omicron- Variant.
The S&P 500 lost nearly 2% the following day as the Federal Reserve warned Omicron poses risks to the economic recovery before rising slightly on Wednesday.
So far this year, the S&P 500 is up about 25% to around 4,600.
Most Wall Street analysts still forecast a positive year for the benchmark index – although returns are likely to be below average.