Omicron variant and hostile Fed are a “double whammy” for the stock market: strategist



Stock market has been hit by a double whammy of unsavory news, says Charles Schwab, chief investment officer Liz Ann Sonders.

“I think at this point in the business cycle and the market cycle, the shift from a very loose policy to a tighter policy has been a factor of volatility [we are seeing]. You add that to an environment where we started to see a huge amount of speculative foam and then add Omicron to that. [concerns], you get the double catalysts that can sometimes cause an eruption of volatility, ”Sonders told Yahoo Finance Live.

The heightened volatility reflects the double blow of concerns about the Omicron variant and the surprisingly belligerent testimony to lawmakers from Federal Reserve Chairman Jerome Powell this week.

Indeed, the markets continue to experience a turbulent period as a result, which began with a terrible loss of over 1,000 points for the Dow Jones Industrial Average the day after Thanksgiving.

The Dow plunged 652 points in Tuesday’s trading, while the Nasdaq Composite and S&P 500 were also deep in the red. All 30 components of Dow were in the red for the session, with the exception of Apple and Merck.

The lukewarm action persisted through Wednesday, with the Dow Jones reversing an intraday gain of 520 points to finish down 461 points. Markets were in the green early Thursday afternoon, but traders remain on high alert.

Sonders is in good company with his take on the Fed injecting the unknown into the markets.

“I think the risk to the market in general is how the market reacts to the Federal Reserve’s tightening financial conditions,” Pershing Square Capital founder Bill Ackman told Yahoo Finance. “I think that’s the risk to the market.”

As for the moves one should make in this riskier market environment, there continues to be a firm bull camp on Wall Street who thinks it’s safe to buy bears.

“I think if there are some names you wanted to add to your portfolio you can use [weakness] to your advantage, ”said Victoria Fernandez of Crossmark Global Investments on Yahoo Finance Live. Fernandez believes the market reaction to this week’s news has been “overblown.”

Fernandez said she buys shares in Apple when weak, for example.

Brian Sozzi is an editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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