Dow Drops More Than 300 Points Ahead Of Fed Meeting, Tesla Sinks While Pfizer, Moderna Jump

Topline

The stock market fell on Monday as investors remained cautious amid mixed headlines about the omicron variant and ahead of a crucial Federal Reserve meeting this week, in which the central bank is expected to speed up the taper of its pandemic bond-buying program.

The market moved lower ahead of a key central bank meeting later this week.

Rafael Henrique/SOPA Images/LightRocket via Getty Images

Key Facts

The Dow Jones Industrial Average fell 0.9%, over 300 points, while the S&P 500 lost 0.9% and the Nasdaq Composite 1.4%.

Stocks retreated from record highs hit last week, with the market recently bouncing back from a sell-off in late November when the Covid omicron variant was first identified as a “concern” by the WHO.

Investors may be somewhat spooked ahead of the upcoming Federal Reserve policy meeting, which concludes on Wednesday, as the central bank addresses last month’s record surge in consumer prices—the highest inflation reading in nearly 40 years.

A majority of central bank officials—including Fed chair Jerome Powell—have recently suggested that the central bank may have to speed up the tapering of its $120 million monthly bond-buying program, which could mean future interest rate hikes sooner than expected.

Stocks tied to the reopening of the economy, including airlines and cruise lines, led the market lower on Monday, with shares of American Airlines and Carnival both falling around 5% each.

Vaccine makers Moderna and Pfizer rose 5.8% and 4.6%, respectively, amid more positive news about existing vaccines and booster shots being effective against the omicron variant.

Crucial Quote:

“Stocks were under pressure as many investors began to fear a trading life without a Fed safety net,” explains Oanda senior market analyst Edward Moya. “A wrath of central bank rate decisions this week will likely show stocks will have to move higher without the help of central bankers.”

Big Number: Nearly $11 Billion

That’s how much Tesla CEO Elon Musk’s net worth fell on Monday, after shares of his electric vehicle maker plunged nearly 5%. Musk is the second richest person in the world with a fortune worth $254.6 billion, according to Forbes’ estimates. The Tesla billionaire was recently named Person of the Year by Time, which garnered some debate.

Tangent:

Shares of Peloton rose more than 7% on Monday—rebounding strongly after several consecutive weeks of heavy losses—after the company hit back at its negative portrayal in HBO’s Sex and The City reboot last week. The at-home fitness company released a new ad with star Chris Noth, whose character on the show died after riding a Peloton bike, alive and well, with a voice over by Ryan Reynolds.

Key Background:

After the emergence of the omicron variant led to a market sell-off in late November, stocks rebounded last week with all three major indexes rising by nearly 4%. Concerns about the new variant have abated recently amid news that vaccines are effective against it, but investors still remain wary with high inflation no longer being described by Fed officials as “transitory.” A majority of experts and economists interviewed by Forbes last month predicted that higher prices will stick around well into 2022—that will likely mean more market volatility.