As Omicron Worries Revive, Stocks and Oil Fall

Stocks on Wall Street fell in early trading Tuesday as volatility triggered by the emergence of the Omicron variant of the coronavirus continued. Oil prices also fell.

The S&P 500 dropped about 0.6 percent after closing with a 1.3 percent gain on Monday. The Stoxx Europe 600 fell 0.4 percent. In Asia, the Nikkei 225 in Japan and the Hang Seng in Hong Kong had each dropped more than 1 percent.

Tuesday’s retreat came after the chief executive of Moderna, a vaccine maker, said in an interview that there could be a “material drop” in the effectiveness of current vaccines to the new variant. The executive, Stéphane Bancel, told The Financial Times that it might be months before an Omicron-specific vaccine could be produced at scale, but added that it would be risky to shift the company’s entire vaccine production while other variants are still prevalent.

Financial markets have been unsteady since the discovery of the new variant in southern Africa late last week. The S&P 500 suffered its worst day since February on Friday, dropping 2.3 percent. On Monday, it began to recover as politicians around the world cautioned against panic, even as some put travel bans in place.

Still, relatively little is known about the Omicron variant. Scientists have detailed its mutations, but it will be a couple of weeks before they know how it responds to existing vaccines and if it causes severe disease.

On Tuesday, investors sought the relative safety of government bonds. The yield on 10-year Treasury notes declined 6 basis points, or 0.06 percentage point, to 1.44 percent, the lowest level in more than two months.

Oil futures fell, with West Texas Intermediate crude slumping 3.8 percent to $67.32 a barrel. Its price has dropped 18 percent this month.

The emergence of the new variant complicates the work of the Federal Reserve, which had begun tightening monetary policy because of higher inflation. But if the new variant restrains economic growth, it could ease the pressure on prices.

“The emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,” Jerome H. Powell, the Fed chair, will tell lawmakers later on Tuesday, according to prepared remarks.

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