FX.co ★ Omicron constitutes more than 70% of new COVID-19 cases in US

Key US stock market indexes continued their downward correction, opening with a sizeable gap-down on Monday. However, the markets closed without significant losses, which could indicate the correction is too weak at the moment. A few weeks ago, the S&P 500, the Dow Jones and the NASDAQ began to move down, but sharply retraced afterwards. The ongoing correction should be stronger than the previous downward move - the Fed's hawkish policy shift should push down equities and other risk assets such as bitcoin. The deteriorating COVID-19 situation in the US is also putting pressure on the stock market. According to the US Center for Disease Control, the Omicron strain now constitutes about 73% of all new coronavirus cases in the United States, indicating that it has become a dominant variant of COVID-19. 60% of new infections were reported among fully vaccinated people, 30% - among those who had received a booster shot earlier. The current vaccines apparently do not fully shield against Omicron and only prevent severe cases, but at this point, it is too early to come to conclusions. If this wave of the pandemic turns out to be higher than the previous one, it could pose a serious challenge to the US economy.

The COVID-19 situation is worsening in other countries as well - the UK has declared an emergency, and many governments now consider enacting lockdowns. A new lockdown would be a serious strain on any economy, and there are no guarantees that the US and the UK would certainly avoid it. As a result, the stock market could resume falling again, just like it did in 2020 at the beginning of the pandemic before the Fed started monetary stimulus.