Omicron Hits NY Stock Market and Cryptocurrency Hard... Tesla Hits '800Sla' Intraday

Oil Prices Plunge Over 5%
US Infrastructure Investment Bill Fails, Reflecting China's Interest Rate Cut

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Fear of the spread of the Omicron COVID-19 variant is driving panic in the U.S. stock and bond markets. Oil and cryptocurrencies are also plunging, signaling a 'red alert' in the year-end capital markets.

As of 10:10 a.m. local time on the 21st, the Dow Jones Industrial Average was down 1.6%, the S&P 500 index fell 1.5%, and the Nasdaq index dropped 1.4%.

Most sectors including tech, energy, finance, and travel plunged simultaneously. Moderna, a COVID vaccine maker, surged about 8% at the open on the back of research results showing that its booster shot increases neutralizing antibodies against Omicron by 37 times, but later reversed to near flat.

Tesla hit $898 intraday but then recovered back to the $900 range.

Unlike the stock market decline, U.S. Treasury bonds showed strength. The 10-year U.S. Treasury yield fell to 1.392%, dropping below 1.4%. A decline in Treasury yields means bond prices are rising, indicating that investment demand is shifting from risky assets to safe-haven assets.

Despite the Federal Reserve (Fed) signaling three rate hikes next year, the drop in Treasury yields is a reversal caused by Omicron fears.

Oil prices are also sharply down. West Texas Intermediate (WTI) crude is trading around $67, down 5%, amid concerns over reduced fuel demand.

Cryptocurrency prices are also falling. Bitcoin dropped 1.4% to $46,130, and Ethereum fell 2.4% to $3,826.

It is analyzed that European countries strengthening control measures due to Omicron spread significantly dampened investor sentiment today. Israel even imposed travel bans on 10 countries including the U.S.

The World Economic Forum (WEF) postponed its annual meeting, the 'Davos Forum,' originally scheduled for January next year in Switzerland, to next summer.

New York City is reportedly deliberating whether to proceed with the Times Square New Year's Eve event, which usually draws large crowds.

With U.S. COVID cases surging daily, President Joe Biden is expected to announce his stance on the Omicron variant spread ahead of the Christmas holiday.

Concerns about a slowdown in U.S. economic growth are also rising after Democratic Senator Joe Manchin expressed opposition to President Biden's social infrastructure investment bill a day earlier.

Goldman Sachs lowered its U.S. economic growth forecast for Q1 next year from 3% to 2%, reflecting Senator Manchin's position.

Negative factors from China are also tightening the market. The People's Bank of China effectively cut the loan prime rate (LPR), the benchmark interest rate, by 0.05 percentage points from 3.85% to 3.80%, which is being perceived as a sign of a possible global economic downturn.

Although this move reflects China's economic growth slowdown, concerns about a global economic downturn are gaining more traction.

This content was produced with the assistance of AI translation services.