(Bloomberg) — Investor sentiment sagged as turmoil for President Joe Biden’s economic agenda and rising coronavirus cases spurred selloffs in stocks around the world.
All major groups in the S&P 500 fell, with lower volume ahead of the holidays potentially exacerbating market swings. Airlines, cruise operators and hotels tumbled. Moderna Inc. climbed as the company said a third dose of its Covid-19 vaccine increased antibody levels against the omicron variant, while Novavax Inc. gained as its shot was cleared by European regulators. Treasuries rose. The dollar retreated.
Goldman Sachs Group Inc. economists reduced their U.S. economic growth forecasts after Senator Joe Manchin blindsided the White House on Sunday by rejecting Biden’s roughly $2 trillion tax-and-spending package, leaving Democrats with few options for reviving it. The Senate will still vote “very early” in 2022 on Biden’s economic agenda, Majority Leader Chuck Schumer said Monday.
Meanwhile, Europe’s biggest countries are introducing more restrictions to curb Covid-19 cases, with U.K. officials keeping open the possibility of stronger measures before Christmas and the Netherlands returning to lockdown. Biden is planning to warn the nation on Tuesday of the perils of remaining unvaccinated, with his top medical adviser saying that hospitals may be strained.
“In our view, markets can look through omicron concerns, and the gradual pace of monetary tightening won’t bring the equity rally to an end,” UBS Global Wealth Management wrote in a note. “Overall, the latest news does not change our outlook for equities.”
Luke Hickmore, investment director at Standard Life Investments, also recommended buying the dip. “The prospects for growth will improve rapidly from here,” he said. “The market will likely see a recovery in the new year when liquidity returns.”
For more market analysis, read our MLIV blog.
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
Some of the main moves in markets:
Stocks
- The S&P 500 fell 1.3% as of 9:30 a.m. New York time
- The Nasdaq 100 fell 1.5%
- The Dow Jones Industrial Average fell 1.3%
- The Stoxx Europe 600 fell 1.4%
- The MSCI World index fell 1.4%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.5% to $1.1294
- The British pound was little changed at $1.3237
- The Japanese yen rose 0.1% to 113.46 per dollar
Bonds
- The yield on 10-year Treasuries declined two basis points to 1.38%
- Germany’s 10-year yield advanced one basis point to -0.37%
- Britain’s 10-year yield was little changed at 0.76%
Commodities
- West Texas Intermediate crude fell 4.5% to $67.65 a barrel
- Gold futures fell 0.4% to $1,798.10 an ounce
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