Wall Street’s losses deepened on Tuesday after the head of the Federal Reserve said it will consider shutting off its support for financial markets sooner than expected. The S&P 500 fell 1.9%. It was already down in the morning amid worries that the omicron variant would hit the global economy. Losses accelerated after Fed Chair Jerome Powell told Congress the central bank will consider halting its bond purchases meant to lower long-term rates sooner than expected, the AP reports. Short-term Treasury yields rose as investors moved up expectations for a Fed rate hike. Crude oil slid 5.4%. The S&P 500 fell 88.27 points to 4,567. The Dow Jones Industrial Average dropped 652.22 points, or 1.86%, to 34,483.72, and the Nasdaq was down 245.14 points, or 1.55%, to 15,537.69.
Powell said the central bank may halt the billions of dollars of bond purchases it’s making every month "perhaps a few months sooner." It had been on pace to wrap up the purchases, meant to goose the economy by lowering rates for mortgages and other long-term loans, in June. An end to the purchases would open the door for the Fed to raise short-term interest rates from their record low of nearly zero. That in turn would dilute a major propellant that's sent stocks to record heights and swatted away concerns about an overly pricey market.
The CEO of Moderna predicted in an interview with the Financial Times that existing COVID-19 vaccines may be less effective with omicron than earlier variants. Regeneron also said Tuesday that its monoclonal antibody treatment may have reduced effectiveness on omicron. Shares in Moderna fell 4.7%, while Regeneron dropped 2.7%. Much is left to be determined about the variant, including how much it may slow already gummed-up supply chains or scare people away from stores. That uncertainty has sent Wall Street through jagged up-and-down jolts as investors struggle to handicap how much economic damage omicron will ultimately do. (Read more stock market stories.)