Dow drops nearly 700 points to session low amid omicron threat and bond-tapering

• Moderna CEO said he expects existing vaccines to be less effective against the Omicron COVID-19 variant

• 10-year Treasury yield fell to 1.44% after losing 9 basis points

U.S. market indexes dropped to their session lows on Tuesday, reversing Monday’s rebound, as investors reassessed risks associated after Moderna CEO warned on the effectiveness of COVID-19 shots against the Omicron variant.

Moreover, on Tuesday, Fed Chair Jerome Powell said the central bank would discuss speeding up bond-buying taper at its December meeting.

Also Read: Powell indicates Fed to speed up bond-buying taper at December meeting

The Dow Jones Industrial Average fell as much as 680 points, or nearly 2%, to 34,456.79.

The S&P 500 also dropped about 2%, to 4,565.19. The Nasdaq Composite dropped 331 points, or 2.1%, to 15451.38.

Markets turned red

The reversal came on the last day of November after Stephane Bancel, the chief executive of Moderna, in an interview with the Financial Times, told that he expects existing vaccines to be less effective against the new variant.

Bancel also mentioned there could be a “material drop” in the current vaccines’ effectiveness against the new variant and told the newspaper that scientists have told him, “This is not going to be good.”

Also Read: Omicron coronavirus variant: All your questions answered

On Monday, in another interview with CNBC, Bancel told that it could take months to develop and ship an omicron-specific vaccine.

Moderna shares dipped nearly 8.5% on Tuesday’s trading session in New York.

Travel shares, which led to Friday’s drop and then gained on Monday, took a hit again on Tuesday. Expedia Group fell more than 4%, Norwegian Cruise Line Holdings tumbled more than 6.3%, Booking Holdings Inc dropped nearly 4.4%, and American Airlines shares were off by nearly 4.5%.

Also Read: Dissecting the latest coronavirus variant threat — Omicron

“We have to expect...that the scenarios, all scenarios, include discoveries of people in this country with omicron and talk that the vaccines don’t work or if they did those who have had Covid have no immunity,” CNBC’s Jim tweeted on Tuesday. “These all cause selling.”

The 10-year Treasury yield fell to 1.44% after losing 9 basis points as investors worried about the economy slowing due to the omicron COVID-19 variant. The yield on the 10-year Treasury was as high as 1.69% last week before Friday’s drop below 1.5%.

Picture Credit: Forbes