Wall Street's major averages fell more than 1% on Wednesday as investors worried about the first confirmed U.S. case of the Omicron COVID variant, and as the market digested Fed comments on inflation
After having advanced as much as 1.9% by late morning, the S&P 500 gave up all its gains in the afternoon along with the Dow and Nasdaq, which fell the most on the day. All three indexes breached key technical levels during the session.
Late in the day, the U.S. Centers for Disease Control said the country had detected its first case of the Omicron variant, which had infected a person who came from South Africa, where the variant was initially discovered.Earlier on Wednesday, Federal Reserve Chair Jerome Powell said policymakers needed to be ready to respond to the possibility inflation may not recede in the second half of next year as expected.
"The market's grappling with the twin concerns of the Omicron variant, which may or may not be able to evade the vaccine, and a more hawkish Powell than expected," said Chris Zaccarelli the chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina. Wall Street had tumbled sharply on Friday when investors first heard of the Omicron variant with health officials saying they were unsure how transmissible or dangerous the variant is and how much protection existing vaccines provide.On Monday, the market rebounded sharply as investors looked for bargains after the sell-off, only to fall again on Tuesday following the Powell comments.
"We tried to buy the dip again but news that Omicron is here already has taken some of the wind out of the sails of the bulls," said Zaccarelli.