Saqib Iqbal Ahmad

NEW YORK (Reuters – COVID-19 has resurfaced after a new variant triggered alarm. This was long after Wall Street thought the threat had passed.

Omicron is a brand new virus strain that was identified by the World Health Organisation and has caused markets to be impacted. It also led to its largest one-day percentage drop in nine months. These moves occurred just one day after Thanksgiving in the United States. The lack of volume may have contributed to the losses.

The long-term implications of the new strain for assets in the United States were not clear as there was little information. Investors reported that there are signs the new strain may be spreading. Questions over the resistance of vaccines might also impact on so-called “reopening” trades that have lifted markets in different times this year.

It is possible that the Federal Reserve may be less aggressive in normalizing monetary policies to reduce inflation because of the new strain.

“Markets rejoiced the end to the pandemic. Slam. “It isn’t over,” stated David Kotok (chairman and chief investment officer of Cumberland Advisors). All policy matters, including monetary policy and business trajectories as well as GDP growth estimates, leisure recovery and other issues are being held.

The S&P 500 fell by a third as pandemic fears mushroomed in early 2020, but has more than doubled in value since then, though the pandemic’s ebb and flow has driven sometimes-violent rotations in the types of stocks investors favor. It is now up by more than 22%.

Markets could have been less vulnerable to COVID-19 because of the availability of vaccines and advancements in treatments before Friday. Recent BofA Global Research survey showed that the virus was only ranked 5th on the list of market “tail risk” factors. The top positions were taken by inflation and central banks hikes.

Technology and growth stocks which had performed well during the last year’s so called stay-at home trade surged on Friday. These included Zoom Communications, Netflix Inc. (NASDAQ 🙂 and Peloton.

Stocks that have risen this year on hopes of an economic recovery could be hurt by rising virus fear. On Friday, energy, financials, and other economically sensitive stock fell, along with many travel-related businesses such as hotels and airlines.

In response to South Africa’s new version, U.S. officials announced Friday that they will impose travel restrictions for eight countries from southern Africa. The same thing has been reported in Israel, and Belgium.

Cboe Volatility Index (also known as Wall Street fear gauge) also saw Friday’s swings send it soaring. Options investors were scrambling for ways to protect their portfolios from further market swings.

Fear gauge https://tmsnrt.rs/3E0bsUi

Andrew Thrasher, portfolio manager for The Financial Enhancement Group, had been concerned that recent gains in a handful of technology stocks with large weightings in the S&P 500, including Apple Inc (NASDAQ:), Amazon.com Inc (NASDAQ:), Microsoft Corp (NASDAQ:) were the result of weakness in the wider market.

He said that this set off the fire for sellers to lower markets and that the COVID news had rekindled the bearish flame.

Some investors believe the COVID-19 weakness might be an opportunity for stock buyers to invest at lower levels. This is in anticipation of the market continuing to recover rapidly from recent dips, which has seen it rise to all-time highs.

We’ve seen many days of economic despair. “Each of these economic optimism declines was a buying opportunity,” said Bill Smead (founder of Smead Wealth Management), in an email to investors. Occidental Petroleum (NYSE) was one of the recommended stocks. Macerich Co (NYSE:), 5.2% and 7.2%, respectively, were down Friday.

The Federal Reserve is uncertain about whether viruses-driven economic uncertainty could slow down its plans for normalizing monetary policy. This comes after it began unwinding $120 billion per month of bond buying programs.

The U.S. fed funds rate futures, which are short-term interest rate expectation tracks, revealed investors who had shifted their expectations of an earlier-than-expected rate hike on Friday.

Investors will watch Fed Chair Jerome Powell, U.S. Treasury Secret Janet Yellen appear before Congress to talk about the government’s COVID response of Nov. 30 and U.S. employment figures due out on Friday.

Investors still hoped for stability in the markets. Cresset Capital Management’s chief investment officer Jack Ablin said that Friday’s liquidity shortage may have exaggerated the market moves, as many people were out celebrating Thanksgiving.

Ablin stated, “My initial reaction was that anything we’re going to see today is too much.”