Futures on US stock indices fell in morning trading on Monday, as investors are again spooked by problems with the active spread of COVID cases. The upcoming changes in the monetary policy of the Federal Reserve System also do not add confidence to them, since the time of "cheap money" is coming to an end. Dow Jones Industrial Average futures fell 319 points (or 0.9%). Futures on the S&P 500 sank by 1% at once, and futures on the Nasdaq-100 fell by 1.2%.
The fact that the omicron strain continues to rage around the world as the winter holiday season approaches are disappointing. Most recently, a report by the World Health Organization stated that almost all states, namely 43 out of 50 in the United States, recorded an increase in the incidence of a new strain. It is also recorded in more than 90 countries. The number of cases of the disease has also grown very much, which has jumped 1.5 times in the last three days. According to the CDC, the number of cases in the United States on Friday was more than 156,000.
As for the political background, Biden's plan continues to be questioned. Senator Joe Manchin, a Democrat from West Virginia, said on Sunday he would not support the Biden administration's plan. According to experts, his decision will be the last blow and will surely kill the $1.75 trillion bill on social spending and climate in the form in which they are trying to promote it. Against this background, Goldman Sachs lowered its GDP growth forecast for the first quarter of 2022 from 3% to 2%. Forecasts for the second and third quarters were also revised in a negative direction.
The senator focuses on inflation, which, in his opinion, is killing the economy. If the new bill is adopted in the form in which it is currently being proposed, it will certainly lead to another jump in price growth. Currently, the US consumer price index is expected to reach 7% in the next few months before starting to decline.
At the end of last week, the S&P 500 fell by 1.9%. The tech-heavy Nasdaq Composite lost almost 3%, while the Dow dropped 1.7%. According to Stock Trader's Almanac, some investors are counting on a Santa Claus rally at the end of the year – this requires index growth in the last 5 trading days before the new year and the first two trading days in January.
It is expected that after another serious market correction, which continues to be observed now, the aggressive approach of investors "buy on the decline", which has been making good profits in the last few years - especially against the background of the coronavirus pandemic, will continue to work now. Let me remind you that last week the Fed announced a more aggressive plan to reduce asset purchases and said it would raise interest rates three times next year.
Let's run through the premarket:
Most of all, Royal Caribbean securities were asked on the premarket today, which lost 4%. United Airlines and Southwest fell by more than 3% each. Darden Restaurants also lost 3%. Shares of energy companies, banks, and industrial enterprises are also trading in the red.
The largest increase was noted by Moderna, which grew by 7.79% after news broke that its booster vaccine provides significant protection against omicron.
As for the technical picture of the S&P 500
The breakthrough of the important support of $ 4,611 came inopportunely. After that, there was an instant sale in the area of $ 4,551. Slightly lower are the larger levels of $ 4,512 and $ 4,470, which, with such a market, we can reach very soon. In the event of an increase in the index and partial compensation to losing, you can count on the recovery of the trading instrument in the area of $ 4,611. Fixing higher will open a direct road to the levels: $ 4,665 and $ 4,718.