S&P 500 Set for Biggest Three-Day Drop Since May: Markets Wrap

(Bloomberg) — Investor sentiment sagged as concern about President Joe Biden’s economic agenda and the omicron coronavirus surge dragged down stocks. Traders said lower volume ahead of the holidays exacerbated market moves on Monday.

The S&P 500 was on track for its biggest three-day drop since May, led by losses in financial and material companies. Bonds fluctuated, while the dollar fell.

“There’s kind of two dynamics going on in the market. Probably the most important one is the imminent reduction in liquidity,” said Jay Hatfield, chief executive officer at Infrastructure Capital Management. “On top of that, you have the omicron concern.”

Goldman Sachs Group Inc. economists reduced their U.S. economic growth forecasts after Democratic Senator Joe Manchin blindsided the White House Sunday by rejecting Biden’s roughly $2 trillion tax-and-spending package. Meanwhile Europe’s biggest countries are introducing restrictions to curb virus cases.

What to watch this week:

Reserve Bank of Australia releases minutes of its December interest rate meeting. Tuesday
EIA crude oil inventory report Wednesday
Bank of Japan Governor Haruhiko Kuroda speaks Thursday
U.S. consumer income, new home sales, U.S. durable goods, University of Michigan consumer sentiment, initial jobless claims. Thursday
Friday: U.S. markets are closed. European markets close earlier

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

The S&P 500 fell 1.4% as of 2:30 p.m. New York time
The Nasdaq 100 fell 1.4%
The Dow Jones Industrial Average fell 1.5%
The MSCI World index fell 1.5%

Currencies

The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.4% to $1.1285
The British pound fell 0.2% to $1.3217
The Japanese yen was little changed at 113.65 per dollar

Bonds

The yield on 10-year Treasuries was little changed at 1.41%
Germany’s 10-year yield advanced one basis point to -0.37%
Britain’s 10-year yield advanced one basis point to 0.77%

Commodities

West Texas Intermediate crude fell 3.1% to $68.66 a barrel
Gold futures fell 0.7% to $1,793 an ounce

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