By Peter Nurse
Investing.com - U.S. stocks are seen opening sharply lower Monday, as concerns over the Omicron Covid-19 variant grow and doubts emerge over U.S. President Joe Biden's ability to pass his $1.75 trillion domestic investment bill into law.
At 7 AM ET (1200 GMT), the Dow Futures contract was down 305 points, or 0.9%, S&P 500 Futures traded 45 points, or 1%, lower and Nasdaq 100 Futures dropped 200 points, or 1.3%.
The major averages come into the holiday-shortened week on a negative run, with the tech-heavy Nasdaq Composite suffering the most, dropping nearly 3% last week as the prospect of higher interest rates persuaded investors to rotate out of growth stocks. The broad-based S&P 500 declined 1.9% and the blue chip Dow Jones Industrial Average slipped 1.7%.
The rapid growth of cases of the Omicron Covid variant has prompted worries that the country’s economic recovery could stall just as the Federal Reserve is starting to tighten monetary policy.
The World Health Organization stated on Saturday that the number of cases of the Omicron variant is doubling in 1.5 to 3 days in areas with community transmission, and that this Covid variety has now been found in 43 of the 50 U.S. states.
Adding to the negative sentiment was the news that U.S. Senator Joe Manchin, a conservative Democrat, has refused to support for Biden's Build Back Better policy bill. This could mean the end of the initiative, which aims to expand the social safety net and tackle climate change. Manchin, who represents the state of West Virginia, is the single biggest recipient of donations from the fossil fuel industry in the Senate and himself has an indirect 30% interest in Enersystems, a coal broker.
Goldman Sachs trimmed its quarterly GDP forecasts for 2022 on the news, cutting its forecast for Q1 2022 to 2% from 3%, Q2 to 3% from 3.5% and Q3 to 2.75% from 3%.
Turning to the corporate sector, Moderna (NASDAQ:MRNA) is likely to be in focus Monday after the drugmaker announced that a third dose of its Covid vaccine provided significant protection against the new variant.
Oil prices slumped as the rapid rise in cases in the Omicron Covid-19 variant raised concerns that the restrictions a number of countries have placed on air travel could last for some time, hitting the demand for crude.
Additionally, the U.S. oil and gas rig count, an early indicator of future output, rose by three to 579 in the week to Dec. 17, its highest since April 2020, according to a report from Baker Hughes, released Friday.
By 7 AM ET, U.S. crude futures traded 3.1% lower at $68.67 a barrel, while the Brent contract fell 2.5% to $71.67.
Additionally, gold futures rose 0.5% to $1,796.20/oz, while EUR/USD traded 0.3% higher at 1.1271.