3 things to watch out for by Investing.com

© Reuters

By Sam Boughedda

Stocks fell on Tuesday after Federal Reserve Chairman Jerome Powell said inflation risk had increased and the central bank could speed up the timetable for reducing bond purchases to support the economic recovery.

Powell told the Senate Banking Committee it was time to remove the word “transient” from the Fed’s inflation vocabulary, although he did not back down on his view that price increases are temporary and would eventually slow down.

The ominous words from vaccine officials also dampened the mood on Wall Street on Tuesday. The CEO of Moderna told the Financial Times that the current Covid-19 vaccines could see their effectiveness drop significantly against the new Omicron variant.

The index fell more than 600 points, with only half an hour of trading remaining in the US session.

Omicron is the latest market buzz after signs the US economy is recovering. Travel restrictions are appearing around the world, although limited to travelers from certain countries in Africa, where the new variant was first identified.

Still, shares of travel and leisure companies slumped amid concerns over prolonged downturns.

US consumer confidence fell in November amid concerns over the rising cost of living and the lingering pandemic.

Here are three things that could affect the markets tomorrow:

1. Powell’s words

The Federal Reserve chief’s hint that the reduction in bonds would increase and complete at a faster rate pushed the US dollar to a strong rally against other major currencies on Tuesday, and investors will likely digest it further. importance Wednesday.

Speaking to the Senate Banking Committee, Powell said: “At this point the economy is very strong and inflationary pressures are higher, so it is appropriate, in my opinion, to consider ending the reducing our asset purchases, perhaps a few months earlier. . “

At the Fed’s November meeting, it announced it would cut bond purchases by $ 15 billion per month.

In addition, Powell said the risk of ever higher inflation has increased, and he expects high inflation until next year, although it is expected to come down again. during 2022.

2. Oil price

Major oil-producing countries are due to meet this week to plan production levels for January. Some expect them to cut production to respond to the United States and other countries coming together to release oil from their national reserves to lower gasoline prices. But the work has been done for them in recent days.

Oil prices have plunged since the announcement last week of the Omicron variant of Covid, sparking global concerns over economic growth. fell another 6% on Tuesday, to less than $ 70 a barrel.

3. Pharmaceutical products in the news

Modern Inc (NASDAQ 🙂 lost 3.5% on Tuesday after CEO Stéphane Bancel told the Financial Times that existing Covid vaccines would struggle to cope with the Omicron variant, predicting a “material decline” in their effectiveness.

Pharmaceutical colleagues also struggled. Regeneron Pharmaceuticals Inc (NASDAQ 🙂 fell more than 1% after issuing a statement on Tuesday that the analysis suggested that its Covid-19 antibody cocktail may have reduced its activity against the new variant. Shares of Merck & Company Inc (NYSE 🙂 were down 0.6% pending a meeting of the Food and Drug Administration advisory committee, which is considering its antiviral pill.

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Felix J. Dixon