Stocks tumble as investors weighed potential effects from omicron variant
A MARTINEZ, HOST:
It could be a bumpy ride for the stock market in the coming days as investors wait for more information about potential economic fallout from the new coronavirus variant, omicron. There was another sharp sell-off on Tuesday as the Dow Jones Industrial Average tumbled more than 650 points. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: Investors, like everyone else, have a lot of questions about the new omicron variant. How contagious is it? How sick does it make people? How much protection do existing vaccines provide? When it comes to assessing the new variant's economic impact, Jim Baird of Plante & Moran Financial Advisors says there are not a lot of answers so far.
JIM BAIRD: Every wave that we've gone through, we've adapted a little more easily, so I don't think that we're headed back to a repeat of what we saw in early 2020. But we're all standing back at this point and watching to see what more we learn about this particular variant.
HORSLEY: The Federal Reserve is looking for answers, too. Fed Chairman Jerome Powell warned lawmakers if the new variant makes people nervous about going back to in-person jobs, it could take longer to unclog the supply chain bottlenecks that have pushed inflation to its highest level in more than three decades. Powell acknowledged price hikes are likely to continue well into next year, but he insisted the Fed will not allow inflation to spiral out of control.
(SOUNDBITE OF ARCHIVED RECORDING)
JEROME POWELL: Families that are living paycheck to paycheck, they're feeling high gas prices, soon enough heating oil prices, food prices. They're certainly feeling that. And you know, this is our job. Our role is to make sure that this higher inflation does not become entrenched.
HORSLEY: The Fed is already starting to wean the economy off its aggressive bond-buying program and was expected to end that program by the middle of next year. Powell said yesterday the Fed could dial back bond purchases more quickly. That might help to cool inflation and give the central bank more flexibility to raise interest rates next year if necessary. The news caught investors by surprise, though, and added to the stock market's volatility. Fed policymakers will likely discuss the timetable for ending bond purchases when they meet in two weeks. By then, they hope to have more information about the new coronavirus variant. Scott Horsley, NPR News, Washington.
(SOUNDBITE OF ARMS AND SLEEPERS' "WHEN THE BODY") Transcript provided by NPR, Copyright NPR.