Markets plunge after CDC confirms first US omicron case

Dow tumbled 461 (session lows), decliners over advancers 3-2 & NAZ sank 283.  The MLP index fell 1+ to 171 & the REIT index sank 7+ to the 461s.  Junk bond funds slipped lower & Treasuries settled a little higher in price.  Oil finished lower in the 65s after rising in the AM & gold was up 6 to 1779 (more on both below).

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US manufacturing activity grew for the 18th consecutive month in Nov as companies continue to work around the clock to keep up with demand during the holiday season despite ongoing supply shortages & shipping delays.  The Institute for Supply Management's (ISM) manufacturing purchasing manager's index rose to a reading of 61.1 in Nov, up 0.3% from the prior month's reading of 60.8.  Any reading above 50 indicates growth in the manufacturing sector.  Sub-categories of new orders, production & employment all grew at a faster pace in Nov, though many respondents commented that they are still struggling to hire, despite some modest progress over the past 3 months.  ISM's report said that 86% of the employment comments related to hiring, with 51% of those respondents saying they are struggling to fill positions, an increase from Oct.  Businesses are also struggling to keep their inventories stocked due to elevated demand. ISM's customer inventories index registered a reading of 25.1 in Nov, the 62nd straight month that it's been what is considered too low.  While it's not good for stores to have sparse or empty shelves, it will likely spur more production ahead to remedy that situation.  Prices are still elevated, but retreated somewhat in Nov to a reading of 82.4 from 85.7 in Oct.  13 of the 15 manufacturing categories reported growth last month, led by apparel & furniture.  The only 2 that contracted were printing & primary metals.  The data comes a day after Federal Reserve chair Jerome Powell warned lawmakers that the recent rise in COVID-19 cases & emergence of the omicron variant pose "downside risks to employment and economic activity and increased uncertainty for inflation" & that the central bank should consider accelerating its tapering of bond purchases during its next policy meeting.

US manufacturing grows for 18th consecutive month

US health officials have confirmed the country’s first case of the new, heavily mutated coronavirus variant called omicron in California, the Centers for Disease Control & Prevention (CDC) said.  Dr Anthony Fauci said the individual, who was fully vaccinated, had just returned from traveling in South Africa to the San Francisco area on Nov 22 & tested positive on Nov 29.  “The individual is self quarantining and all close contacts have been contacted and all close contacts, thus far, have tested negative,” he announced at a press briefing.  “We feel good that this patient not only had mild symptoms, but actually the symptoms appear to be improving.”  The CDC said genomic sequencing was initially conducted at the University of California, San Francisco & confirmed by the CDC as the omicron variant.  California Gov Gavin Newsom cautioned residents against panicking.  “But we should remain vigilant,” he said over Twitter. “That means get vaccinated. Get boosted. Wear a mask indoors.”  The World Health Organization said  that omicron has been reported in at least 23 countries.

U.S. confirms nation’s first case of omicron Covid variant in California

Strong consumer demand sparked a wave of CEO optimism about the economy over the next 6 months, the Business Roundtable said, as it revealed the results of its most recent survey.  But the lobbying group, whose members are CEOs of major American companies, cautioned that the survey was completed before the emergence of the new omicron Covid variant & that the survey measured only the execs' plans for the next 6 months.  The Business Roundtable released its Q4 CEO Economic Outlook Survey, revealing its headline index had risen to its highest level in the 20-year history of the survey, hitting a value of 124, which is up 10 points from Q3.  On top of that, CEOs reported their plans for hiring increased 13 points, plans for capital investment increased 7 points & expectations for sales increased 9 points.  The group cited the release of enormous pent-up consumer demand as a driver of the optimism in corp boardrooms.  “This quarter’s survey reflects the encouraging signs we’re seeing with the economic rebound as consumers begin to resume travel and spending,” said Business Roundtable Chair Doug McMillon.  “Continued progress in defeating the pandemic, including new variants, will be necessary to sustain strong growth into the second half of 2022.”  In their first estimate of 2022 US GDP growth, CEOs projected 3.9% growth for the year.  The Business Roundtable survey also asked CEOs for the cost pressures facing their companies.  48% identified labor costs as the top cost pressure, followed by 20% identifying supply chain disruption costs & 17% identifying material costs.  Business Roundtable CEO Josh Bolten spotlighted recent legislation on Capitol Hill as one of the reasons for the economic optimism.  “The recent bipartisan Infrastructure Investment and Jobs Act, which directs much-needed resources to upgrade our nation’s physical infrastructure and broadband connectivity, is an important investment in the long-term health of the economy,” he added.  “As the economy reverts to a normal cadence, sound economic policy can help sustain strong growth over the long term.”  The survey was conducted Nov 3-22.

CEO survey taken before omicron emergence shows optimism about the economy over the next 6 months

The World Health Organization (WHO) said that 23 countries across the world have reported cases of the highly mutated omicron Covid-19 variant.  “At least 23 countries from five of six WHO regions have now reported cases of omicron and we expect that number to grow,” WHO Director-General Tedros Adhanom Ghebreyesus told reporters.  “WHO takes this development extremely seriously and so should every country. But it should not surprise us,” Tedros continued.  “This is what viruses do. And it’s what this virus will continue to do, as we long as we allow it to continue spreading.”  The new number comes one day after White House chief medical advisor Dr Anthony Fauci said 226 cases of the variant have been detected across 20 countries.  The variant, which was reported to WHO by South Africa a week ago, has more than 30 mutations to the spike protein alone.  Some of the mutations are associated with a decrease in antibody protection & higher transmission, according to the WHO.  Tedros said there is still more to learn about the new variant's effect on transmission, the severity of disease & the effectiveness of tests, therapeutics & vaccines.  Several WHO advisory groups have met in the last few days to “evaluate the emerging evidence & prioritize the studies needed to answer these questions,” he said.  He added that the highly transmissible delta Covid-19 variant still accounts for almost all cases globally. Tedros said using the tools available to prevent transmission of delta will also stop the transmission of omicron.

WHO says omicron has been found in 23 countries across the world

Gold futures ended higher, recouping most of the 0.5% loss suffered in the previous session.  Gold is really struggling for direction having repeatedly failed to generate any momentum above $1800.  The $ easing in recent days & the huge amount of uncertainty in the markets should be giving it a lift, but near-term Treasury yields have risen & more action by the Fed may be necessary.  In testimony to the House Financial Services panel today, Fed Chair Jerome Powell said the central bank's plan to slow & end its asset purchases shouldn't disrupt financial markets.  Feb gold rose $7 to settle at $1784 an ounce. 

Gold futures end higher, buoyed by omicron-fueled uncertainty

Oil futures ended lower, giving up earlier gains following news that the US has identified its first case of the omicron variant of coronavirus.  The turn lower for prices late in the session was linked to growing concerns over COVID-19 & the potential for the new variant to disrupt economic activity & oil demand.  Traders await tomorrow's decision by the Organization of the Petroleum Exporting Countries & their allies on production levels.  Some analysts said the group (OPEC+) may decide to pause their current deal to boost monthly output by 400K barrels per day, given the recent plunge in oil prices following the discovery of the new variant of coronavirus.  Jan West Texas Intermediate crude fell 61¢ (0.9%) to settle at $65.57 a barrel, after touching an intraday high of $69.49.  Prices lost 5.4% on yesterday.  

Oil futures finish lower as U.S. identifies its first case of the omicron variant of coronavirus

Everybody in the stock market is NERVOUS.  The day began with a rally, although unimpressive.  At least the selling stopped.  Then the news about the virus variant in the US hit & selling was pretty much non-stop. The Dow plunged about 1000 from its early high along with selling into the close  There is not much else to say, other than wait for more developments on the virus.

Dow Jones Industrials