Here are the most important news, trends and analysis that investors need to start their trading day:
1. Dow set to rebound after its worst weekly losing streak of the year
Dow futures rose more than 200 points Monday following a roller-coaster week driven largely by uncertainty over the Covid omicron variant. The 30-stock average saw its fourth straight weekly loss for the first time since September 2020. Friday’s decline after the government’s disappointing headline number on November jobs growth capped weekly drops of around 1% for the Dow and S&P 500 and almost 2% for the Nasdaq. The Dow on Friday did trim earlier losses as the internals of the employment data were more reassuring. The Dow, S&P 500 and Nasdaq were, respectively, 5%, nearly 3.7% and 6% away from their latest record high closes achieved last month. The 10-year Treasury yield ticked higher early Monday, but remained below 1.4%. The benchmark yield approached 1.7% last month and in October. It soared over that level back in March. The 10-year started the year under 1%.
2. Bitcoin now down 30% from November’s all-time highs
Bitcoin traded under $49,000 on Monday after a terrible weekend for the world’s biggest cryptocurrency. On Friday morning, bitcoin was around $57,000, but then tumbled more than 17% from Friday night into Saturday, hitting a low just under $43,000, before stabilizing Sunday. The selling came as investors at-large fled riskier assets over fears of what omicron could mean for the global economic recovery.
Bitcoin was down about 30% from its all-time high of close to $69,000 in early November. Ether, the world’s second-largest crypto, traded under $4,000 on Monday. It, too, found its footing Sunday after a more than 16% slide from Friday to Saturday. Ether hit an all-time of more than $4,800 last month.
3. Major shift at the Fed could see speedier end to easy policies
The Federal Reserve is likely to decide to double the pace of its taper to $30 billion a month at its upcoming December meeting, recent comments from Fed officials suggest. Initial discussions could also begin about when to raise interest rates and by how much next year. Fed Chair Jerome Powell, in testimony last week, supported the idea of a faster taper and made a dramatic shift when he said the major economic concern regarding omicron was inflation, because if it caused another Covid spike it might keep people out of work and worsen supply constraints. The central bank chief did nothing in his testimony to dissuade the market that the current pricing in of two rate hike rates next year was wrong. The Fed’s final scheduled policy meeting of the year is next week.
4. Health officials say early reports encouraging about omicron
Early indications suggest the highly mutated omicron variant may be less dangerous than the highly contagious delta strain, according to U.S. health officials. While delta remains the dominant form of the coronavirus in the U.S., omicron has been detected in about one-third of U.S. states less than two weeks after South Africa reported the new variant to the World Health Organization. American officials continued to urged people to get vaccinated and to receive booster shots, as well as take precautions such as wearing masks indoors in public. They said anything that helps protect against delta will also help protect against other variants.
5. U.S. expected to announce diplomatic boycott of China’s Winter Olympics
The Biden administration is expected to announce this week a diplomatic boycott of the 2022 Winter Olympics in Beijing, a senior administration official told NBC News. Supporters of such a step cite China’s poor record on human rights as justification, saying China is using the games to gloss over its ill treatment of civil rights activists, political dissidents and ethnic minorities. A diplomatic boycott would mean that no U.S. government officials would attend the games but that U.S. athletes would still be allowed to compete. On Monday, China threatened to take “firm countermeasures” if the U.S. proceeds. However, Chinese officials did not give any details on how China might retaliate.