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Stocks Fall After Powell's Taper Comments - The New York Times
Nov 30, 2021 1 min, 54 secs

Just as a worrying new variant of the coronavirus has begun to spread, the Federal Reserve chair signaled on Tuesday that the central bank could reduce its support for the economy more quickly, sending a shudder through Wall Street and pushing the S&P 500 negative for November.

The bond-buying program has been a crucial factor in the swift rise of stocks since the start of the pandemic — the S&P 500 has more than doubled since March 2020 — and the market’s response to Mr.

As the S&P 500 struck bottom in March 2020, the Fed was restarting the type of money-printing program, known as quantitative easing, that it put in place because of the financial crisis of 2008.

The central bank pumped trillions of dollars into the financial system by purchasing assets such as Treasury bonds with newly created dollars — a key source of momentum for the seemingly relentless rally in share prices.

Powell’s testimony as investors struggled to understand the danger posed by the Omicron variant, which began roiling markets last week.

Futures prices for benchmark American crude tumbled more than 4 percent, and were down roughly 20 percent since the start of November.

Taken at face value, such a sell-off implies that investors see growing risks that the Omicron variant will set off a global economic slowdown.

But some investors think the prices are likely to reverse.

The chaos in global shipping is likely to persist as a result of the massive traffic jam.

The S&P 500 is up more than 21 percent in 2021 — and that could be reason for the sell-off to worsen next month, as investors try to preserve their gains for the year in the face of growing concerns about what lies ahead.

You’ve got uncertainty around inflation, uncertainty around global central bank policy,” said Daniel Ivascyn, the group chief investment officer at PIMCO, a large fund manager based in Newport Beach, Calif

Still, investors say the Omicron variant is unlikely to trigger the same kind of response from governments, business or individuals that the virus did when it first emerged

Even if Omicron is a greater threat than the Delta variant before it, investors expect its effect on the market to be less severe than the nearly 34 percent crash in share prices between February and March 2020

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