U.S. Stocks May Move Back To The Downside In Early Trading

Stocks may come under pressure in early trading on Tuesday, giving back ground following the notable rebound seen in the previous session. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 386 points.

Renewed concerns about the new coronavirus variant may lead to a pullback on Wall Street after Moderna’s (MRNA) CEO said in an interview that Covid-19 vaccines are likely to be less effective against Omicron.

Moderna CEO Stephane Bancel said in an interview with the Financial Times that it would take a couple of weeks to determine how much the mutations have affected the efficacy of the vaccines currently available in the market.

“Depending on how much it dropped, we might decide on the one hand to give a higher dose of the current vaccine around the world to protect people,” Bancel said. “Maybe people at very high risk, the immunocompromised, and the elderly should need a fourth dose.”

Regeneron Pharmaceuticals (REGN) has also warned its Covid-19 antibody cocktail and similar drugs could be less effective against the Omicron variant.

Meanwhile, Federal Reserve Chair Jerome Powell is set to appear before the Senate Banking Committee this morning to discuss the pandemic and the CARES Act.

In prepared remarks, Powell said the recent surge in new Covid-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation.

“Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions,” Powell said.

The potential for the intensification in supply-chain disruptions comes as Powell noted pandemic-related supply and demand imbalances have already contributed to notable price increases in some areas.

Just after the start of trading, MNI Indicators is due to release its report on Chicago-area business activity in the month of November. The Chicago Business Barometer is expected to come in unchanged at 68.4, with a reading above 50 indicating growth.

The Conference Board is also due to release its report on consumer confidence in the month of November. The consumer confidence index is expected to drop to 110.7 in November from 113.8 in October.

Following the sell-off seen last Friday, stocks showed a strong move back to the upside during trading on Monday. The major averages all regained ground, with the tech-heavy Nasdaq leading the way higher.

The major averages gave back some ground going into the close but remained firmly positive. The Dow climbed 236.60 points or 0.7 percent to 35,135.94, the Nasdaq spiked 291.18 points or 1.9 percent to 15,782.83 and the S&P 500 jumped 60.65 points or 1.3 percent to 4,655.27.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan’s Nikkei 225 Index slumped by 1.6 percent, while China’s Shanghai Composite Index closed slightly higher and Australia’s S&P/ASX 200 Index edged up by 0.2 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.’s FTSE 100 Index has slid by 0.8 percent, the French CAC 40 Index is down by 1 percent and the German DAX Index is down by 1.1 percent.

In commodities trading, crude oil futures are tumbling $2.40 to $67.55 a barrel after jumping $1.80 to $69.95 a barrel on Monday. Meanwhile, after slipping $2.90 to $1,785.20 an ounce in the previous session, gold futures are climbing $10.30 to $1,795.50 an ounce.

On the currency front, the U.S. dollar is trading at 112.73 yen compared to the 113.53 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1366 compared to yesterday’s $1.1291.