⌛️Stocks plunged on Omicron variant🏀

⌛️Our Greatest Fear🏀

Stocks plunged on Tuesday after Uncle Powell spoke about speeding up the bond tapering to combat inflation. It comes at a sensitive time when the market is worried about the Omicron variant. Equities reacted aggressively. The Dow dropped by 1.9%, together with S&P 500. Nasdaq fell by 1.6%.

🥉A weak Footing💸

The market was already jittered when major vaccine producers discussed the weaker effect of vaccines and treatment against the Omicron variant. The sell-off accelerated as Uncle Powell spoke in the Senate Banking Committee on the possible discussion in December on tapering momentum.

💰Dollar Hint💳

10 years treasury yield had fallen to 1.42%, the lowest on the day and recovered to 1.44% after tapering news. The dollar movement perhaps hints at the market’s guess on a faster tapering. When bond yields fall, the US dollar often weakens, and investors purchase fewer dollars when the US bonds become less juicy.

Although the US Dollar index fell by 0.4% on the day, it is still above the intraday low. The sudden rise reflects market participants seeing US bond yields moving higher as the Fed starts to buy lesser bonds which could theoretically press down bond prices and push up yields.

💎Russell 2000💎

The favourite of Pika World Russell 2000 is perhaps on the pivotal point towards correction. It is down about 9% from its high in early November. Small caps tend to be more sensitive to economic demand, and therefore, tapering if it leads to reduced demand, tends to have a more pronounced impact on the index.

Pika World maintains a cautious bull on the market.

We hope you enjoy this read! Pika World will be back with you on the next big move.

Cheers,

Pika Nat.