Although the stock market opened higher on Wednesday, it abandoned gains from the previous day and quickly turned negative after the Centers for Disease Control and Prevention reported the first case of the new variant of Covid-Omicron in the United States, which triggered a sell-off.
The Dow Jones Industrial Average lost 1.3% to over 450 points, while the S&P 500 lost 1.2% and the Nasdaq Composite lost 1.8%.
Despite the strong start to the day, stocks went negative – and the Dow lost more than 500 points – after Dr. Anthony Fauci and the CDC had confirmed the first US case of the new Omicron variant in California.
The strongly mutated variant has now been discovered in 24 countries, with some having already reintroduced bans – although, according to the World Health Organization, the delta variant still makes up the majority of coronavirus cases worldwide.
The bad news shocked investors again as stock market volatility had increased since late last week when the WHO first identified Omicron as a variant of “concern” and the Dow plummeted 900 points on its worst day in 2021.
Travel stocks led the declines on Wednesday, with airline, hotel and cruise company stocks hit particularly hard.
Markets are also reacting to comments a day ago from Federal Reserve Chairman Jerome Powell who said the central bank could soon tighten its expansionary monetary policy by accelerating the expansion of its pandemic bond-buying program.