US stock futures were higher in overnight trading on Tuesday after a sell-off on Wall Street on concerns about the new Covid variant, omicron, and the Federal Reserve is considering a faster-than-planned decline.
Dow futures rose nearly 60 points. S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 0.5%.
The major averages have seen several choppy sessions, beginning last Friday when the Dow Jones Industrial Average had its worst day since October 2020. Stocks rebounded on Monday, only to turn lower again on Tuesday.
Wednesday marks the first trading day in the last month of 2021.
Tuesday, The Dow Jones index lost more than 650 points. The S&P 500 fell 1.9% and the Nasdaq Composite fell 1.6%. Small cap Russell 2000 index fell 1.9% as cyclical names in the markets slowed.
Stocks hit session lows when Federal Reserve Chairman Jerome Powell said the central bank would discuss accelerating bond-buying at its December meeting. Despite the potential disruption to omicron, the Fed chief said he believes reducing the pace of monthly bond buying could move faster than the $15 billion per month schedule announced earlier this month.
“At this point, the economy is very strong and inflationary pressures are higher, so it is appropriate in my view to consider ending the reduction in our asset purchases…maybe a few months before that,” Powell said. “I expect we’ll discuss that at our next meeting.”
The Fed’s quick removal of easy policy tells investors that the central bank is focused on tackling inflation, rather than new threats from the pandemic.
“Markets appear to be having trouble accommodating a combination of growing uncertainty around the impact of the Omicron variable and the Fed’s hawkish pivot in the context of persistently high inflation,” said Gregory Daco, chief US economist at Oxford Economics.
Bond yields also fell on Tuesday, with the 10-year US Treasury falling 8 basis points to less than 1.45% amid concerns over Omicron.
The new Covid variant, which was first detected in South Africa, has been identified in more than a dozen countries, causing travel restriction. Emotions subsided on Tuesday, and modern The CEO of the Financial Times said that You expect current vaccines to be less effective against the new alternative.
Stocks wrapped up a volatile month of trading on Tuesday. The Dow Jones index lost 3.7 per cent for the second month of losses in three. The S&P 500 is down 0.8%, while the Nasdaq Composite is up 0.25% in November. The Russell 2000 index fell 4.3 percent in November, its worst month since March 2020.
However, the major averages are rising strongly for the year. The Dow is up 12.7% and the S&P 500 is up 21.6% in 2021. The Nasdaq Composite is up 20.6% this year.
On Wednesday, investors will evaluate updates on the omicron variable, as well as some key economic reports. Wednesday morning the November manufacturing PMI, the ISM manufacturing index and October construction spending are due to be released Wednesday morning.
ADP private payroll data will be released at 8:15 am At 8:15 am, economists polled by Dow Jones expected 506,000 private jobs added in November, down from 571,000 in October.