Wall Street Tumbles at Open as Omicron Fear, Rate Backdrop Weigh; Dow Down 600 Pts By

© Reuters.

By Geoffrey Smith 

-- U.S. stock markets started the weak in bearish fashion, with all three major indices falling over 1% in response to fears of another Covid-19 driven slowdown - this time accompanied by the prospect of rising interest rates.

By 9:45 AM ET (1445 GMT), the Dow Jones Industrial Average was down 601 points, or 1.7% at 34,764 points, while the S&P 500 and Nasdaq Composite were both down 1.4%. The Dow, with its heavy weighting of cyclical stocks, underperformed as warnings of the spread of the new Omicron variant of Covid-19 stoked fears that people will shun mixing over the next few weeks, even if they are allowed to. 

The mood was also soured by news at the weekend that Senator Joe Manchin had effectively blocked the passage of the 'Build Back Better' bill through the Senate, saying he couldn't support it in its current form. With the Senate split 50-50, the only chance of passing it "as is" depends on the administration convincing Republican Senators to vote for it - something that appears unlikely in the current environment. 

Goldman Sachs (NYSE:GS) analysts downgraded their growth forecasts in response to the news, factoring in a lower fiscal stimulus and also the negative effect on labor supply. The bill had aspired to make it easier for low and middle-income families to get child care, making it easier for both parents in a household to take jobs. 

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