(Bloomberg) — A rebound in stocks moderated on Wednesday, while U.S. futures drifted lower amid uncertainty over the omicron virus strain’s economic impact and a foggy outlook for U.S. fiscal stimulus.
Gains in tech shares offset declines in cyclical sectors in Europe, while a gauge of Asia-Pacific shares was in the green. Trading volume was lower than the 30-day average ahead of the holidays. Contracts on the S&P 500 and the Nasdaq 100 were lower after rebounding Tuesday from a recent slump.
A dollar gauge was steady, as were crude oil prices and Treasury yields.
Markets have been volatile at the end of a year that has seen equities rally amid a recovery from the pandemic, before losing some steam on worries about inflation, tighter policy and the omicron virus variant, which is prompting tighter curbs. Focus also remains on the $2 trillion U.S. economic plan after President Joe Biden said there’s still a chance he can strike a deal to get it through Congress.
Thinner trading volumes heading into the holidays could exacerbate market swings, leaving strategists reluctant to read much into day-to-day gyrations during the period.
“Despite the new restriction measures, many investors believe that omicron would only have a temporary impact on the economic activity and should not be a problem for the overall positive trend in equities,” said Ipek Ozkardeskaya, senior analyst at Swissquote Group. “Investors should remain cautious with big ups and downs into the Xmas break.”
On the virus front, the U.S. Food and Drug Administration is poised to authorize a pair of pills from Pfizer Inc. and Merck & Co. to treat Covid-19 as soon as this week, adding to the arsenal of coronavirus treatments. Biden said omicron will result in more infections among vaccinated Americans but that they are very unlikely to be severely ill.
The global reopening narrative will in time gain traction again, Nicole Webb, Wealth Enhancement Group senior vice president, said on Bloomberg Television.
“While this variant is significant and the impact is powerful, I do still have my rose-colored glasses heading into the New Year because below the surface there is still a lot of opportunity” away from trades that are played out or frothy, Webb said.
Meanwhile, Elon Musk sold more Tesla Inc. shares, taking him closer to making good on his pledge to sell 10% of his shareholding in the electric carmaker.
What to watch this week:
- 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 Stoxx Europe 600 was little changed as of 8:34 a.m. London time
- Futures on the S&P 500 fell 0.3%
- Futures on the Nasdaq 100 fell 0.5%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The MSCI Asia Pacific Index rose 0.2%
- The MSCI Emerging Markets Index rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.1272
- The Japanese yen fell 0.2% to 114.29 per dollar
- The offshore yuan was little changed at 6.3796 per dollar
- The British pound was little changed at $1.3269
Bonds
- The yield on 10-year Treasuries was little changed at 1.47%
- Germany’s 10-year yield advanced one basis point to -0.30%
- Britain’s 10-year yield advanced two basis points to 0.89%
Commodities
- Brent crude was little changed
- Spot gold fell 0.1% to $1,786.88 an ounce
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