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Stock sell-off escalates amid concerns over omicron impact, comments Powell: NPR


Shares fell on Tuesday as investors assessed the potential economic fallout from the new variant of the coronavirus.

The Dow Jones Industrial Average was down more than 600 points as of noon ET.

In testimony before the Senate Banking Committee, Federal Reserve Chairman Jerome Powell warned that growing concerns about the coronavirus, including the new omicron variant, could make people wary of returning to jobs in anybody. This could slow the labor market recovery and prolong supply chain bottlenecks that have contributed to the highest inflation in more than three decades.

Powell said high inflation is expected to continue well into the next year.

Fed policymakers are expected to meet in about two weeks. Powell said at that time they might have more information on the possible health effects of the omicron variant and how it responds to existing vaccines.

With increasing price pressures, the central bank has started to slow down its aggressive bond buying program, which was put in place at the start of the pandemic to support financial markets. But Powell suggested the process could be sped up, so the bond purchases would end a few months earlier than next summer.

Ending bond purchases sooner would give the Fed more flexibility to raise interest rates, if necessary, to keep inflation from spiraling out of control.

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