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(Reuters) – Wall Street’s main indexes dropped more than 1% on Monday in a broad selloff as investors worried about a deluge in COVID-19 cases potentially undercutting the economic rebound and a critical blow to President Joe Biden’s domestic investment bill.
All major S&P 500 sectors were lower as coronavirus cases surged in New York City and around the United States over the weekend, dashing hopes for a more normal holiday season. Britain’s leader said he would take more steps to slow the spread of the Omicron coronavirus variant if needed, after the Netherlands began a fourth lockdown and as other European nations considered restrictions.
“Typically what happens in Europe is a bit of a preview for what we see in the United States. So, if we see a lot more infections in the U.S., it could stress hospitals, make people less reluctant to get out, spend and partake in the economy. That’s definitely a cause of concern,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
The Dow Jones Industrial Average fell 551.14 points, or 1.56%, to 34,814.3, the S&P 500 lost 67.14 points, or 1.45%, to 4,553.5 and the Nasdaq Composite dropped 233.33 points, or 1.54%, to 14,936.35.
The benchmark S&P 500 traded below its 50-day moving average, a key technical level.
Economically sensitive S&P 500 groups such as financials and materials were among the biggest sector decliners.
In a further knock to market sentiment, U.S. Senator Joe Manchin said on Sunday he would not support Biden’s $1.75 trillion domestic investment bill.
Goldman Sachs (NYSE:GS) trimmed its quarterly U.S. GDP forecasts for 2022 after Manchin’s comments.
The developments came as the Federal Reserve decided last week to end its pandemic-era stimulus faster, with the central bank signaling at least three quarter-percentage-point interest rate hikes by the end of 2022.
The S&P 500 was now logging a loss for the month of December. Investors have taken a more defensive stance so far this month, with sectors such as consumer staples, real estate and utilities leading gains.
The S&P 500 remains up some 20% so far in 2021.
“Given the strength of the market so far this year, in some ways you could see investors take some profits and look for greater clarity in the new year,” said Michael Arone, chief investment strategist at State Street (NYSE:STT) Global Advisors.
In company news, Oracle Corp (NYSE:ORCL) shares fell 4.5% after the business software maker said it would buy electronic medical records company Cerner Corp (NASDAQ:CERN) for $28.3 billion. Shares of Cerner added about 1%.
Declining issues outnumbered advancing ones on the NYSE by a 5.25-to-1 ratio; on Nasdaq, a 3.56-to-1 ratio favored decliners.
The S&P 500 posted two new 52-week highs and 11 new lows; the Nasdaq Composite recorded 10 new highs and 321 new lows.
