By
Chimamanda U. Martha
April 3rd, 2024
The current outlook of the stock market indices is very different from the trend observed in the past week where we saw a bullish rally across the board.
The United States stock market indices retreated from last week’s record highs as investors weigh the possible outcome of the forthcoming Federal Reserve meeting on Wednesday. The expectations of decisions per the projected slow tapering of the bond purchases program have left investors worried and cautious about throwing their weight on some stocks.
The S&P 500 (INDEXSP: .INX) dipped 0.91% to 4,668.97, the Dow Jones Industrial Average (INDEXDJX: .DJI) slumped 0.89% to 35,650.95, while the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) recorded the bigged dip of 1.39% to 15,413.28.
Industries that stand to lose the most from the current Omicron variant of the coronavirus took the hardest hit on Monday. Norwegian Cruise Line Holdings Ltd (NYSE: NCLH) retreated 4.41% and the shares ended the trading session at a price of $20.59 each. Delta Air Lines Inc (NYSE: DAL) took a 3.43% bite to $36.97.
“Concerns are plentiful… ranging from a market which recently rallied quickly back to record highs, to ongoing Covid concerns. But the elephant in the room today and perhaps for the next few days will be the Federal Reserve and just how hawkish a tone they adopt later this week,” said Jim Paulsen, chief investment strategist for Leuthold Group.
Despite the fears hovering around the Omicron variant, Dr. Anthony Fauci said the advocated Covid booster shots “optimal care,” but said the definition of fully vaccinated would not change. As the top pharmaceutical companies were caught unawares with the emergence of the Omicron variant, intense rediscovery has been launched to determine the efficacies of the current vaccine formula.
Israeli researchers from the Sheba Medical Center and the Health Ministry’s Central Virology Laboratory came to a conclusion that the current vaccine from Pfizer Inc (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX)) is effective against the Omicron variant provided the three-course dose is complete. This proclamation sent the shares of both companies up 4.49% and 7.97% respectively.
Stock Market Indices Still Prone to Volatility
The current outlook of the stock market indices is very different from the trend observed in the past week where we saw a bullish rally across the board. The Dow Jones advanced 4% in the past week while the S&P 500 recorded its best week since February. Analysts are concerned this volatility is billed to continue into the near future.
“We believe markets can continue to take a higher inflation reading in their stride, though additional volatility remains a risk. With Fed policy staying relatively accommodative, the backdrop for equities is still positive, and we favor winners from global growth,” said Mark Haefele, Chief investment officer of UBS Global Wealth Management.
The chances of ending the $120 billion monthly bond purchase program sooner than the current timeline of June 2022. Should the tapering be effected, the chances of increasing the interest rates are high, and this also creates an avenue for investors to remain cautious as the year comes to an end.