Stocks Under Pressure: All Eyes on Fed Outcome
5:03 pm Monday, December 13th, 2021
Wall Street fell from record highs on Monday, with shares of Carnival Corp and several airlines tumbling as investors worried about the Omicron coronavirus variant ahead of a Federal Reserve meeting later this week.
The Omicron variant is reportedly weighing on sentiment after UK Prime Minister Johnson warned of a “tidal wave” of new cases coming and the British government upped its COVID-19 alert level on Sunday. The UK FTSE declined 0.8% on Monday, and travel/cyclical stocks are bearing sizable losses amid growth concerns.
There might also be some profit taking after last week’s rally, as well as hesitation on the part of buyers in front of the FOMC policy decision on Wednesday.
From a sector perspective, the S&P 500 energy (-2.4%) and consumer discretionary (-2.5%) sectors are both down more than 2.0%, but the information technology sector (-0.7%) is also dragging on the market amid weakness in growth stocks despite a decline in long-term interest rates.
The defensive-oriented utilities (+1.1%), real estate (+1.1%), consumer staples (+1.1%), and health care (+0.8%) sectors are sporting decent gains.
Pfizer (PFE) was carrying the health care sector with a 5% gain after agreeing to acquire Arena Pharma (ARNA) for $6.7 billion, or $100 per share, in cash. The deal represents a 100% premium over ARNA’s closing price on Friday.
Apple (AAPL 179.22, -0.26, -0.1%) nearly reached a $3.0 trillion market capitalization this morning after JP Morgan raised its price target on AAPL to a Street-high of $210 and reiterated the stock as a Top Pick for 2022. AAPL shares have turned negative.
In the Treasury market, the 10-yr yield is down seven basis points to 1.42% while the 2-yr yield is down three basis points to 0.64% — indicating a flattened curve that has additionally pressured the bank stocks. The SPDR S&P Bank ETF (KBE 53.49, -1.09, -2.0%) is down 2.0%.
