Stocks plunged on Tuesday following statements by Jerome Powell, Chairman of the Federal Reserve, to Senators about how the central bank could have to reduce its asset purchases. Powell also gave dire predictions regarding the potential economic consequences from the Omicron variation.
The Dow Jones dropped by more than 500 points and the S&P 500 fell sharply after warning that the super-strain could keep more people working from home, push inflation deep into next year and intensify supply chain problems sweeping the US.
After a further drop of 350 points in the Dow on Tuesday morning, Moderna CEO Stephane Bancel said that it might take months for a vaccine to combat the emerging variant. The move was triggered by the announcement from 70 countries to ban travel to the country.
On Monday, President Biden stated that Omicron’s emergence from south Africa is ‘no reason to panic’. He also stressed the need for no further restrictions so long as Americans are vaccinated.
Scientists and policymakers still struggle with how to manage the strain. It has been detected in several cases across Canada and Europe. Powell’s prediction seemed to increase the uncertainty.
There is much to know about this variant, but the WHO has warned of a’very high global risk’. Early evidence indicates that it may be even more contagious.
Powell told Senators that they should drop the word ‘transitory” when talking about inflation. He also said that asset purchases will end sooner than anticipated due to the largest price rise in over 30 years. Powell also indicated that he was open to raising interest rates earlier in the testimony.
Powell spoke out in reference to Fed’s bond buying program.
Jerome Powell, Chairman of the Federal Reserve, told Congress that the new COVID-19 version could cause a slowdown in the economy and decrease the number of jobs. He mentioned ‘high’ inflationary pressures and warned Tuesday the central bank may need to ‘taper’ its asset-purchases sooner
The Dow Jones dropped by more than 500 points and the S&P 500 fell sharply after warning that the super-strain could keep more people working from home, push inflation deep into next year and intensify supply chain problems sweeping the US
He said, “And I expect that that we’ll talk about that at our opening meetings in a few weeks,” he continued.
This month the Fed started to decrease its support of the economy and currently is on track to taper $120 billion monthly Treasuries- and Mortgage-backed Securities purchases by June.
This program, which included stimuli packages and COVID-19 panademic relief measures, was launched in 2020.
Powell spoke out about his concerns regarding Omicron’s impact on the long-term and the recent increase in cases.
Powell prepared testimony that he stated, “The rise in COVID-19-related cases and the emergence Omicron variant present downside risks for employment and economic activity as well as increased uncertainty about inflation.”
“Greater worries about the virus could decrease people’s willingness and ability to work, which could slow the progress of the labor market. It would also intensify disruptions in supply chains.
Fed officials signaled already that they expect the central bank to reconsider its policies of maintaining low interest rates despite record inflation.
Also providing a warning Tuesday was vaccine maker Moderna’s CEO Stephane Bancel.
Bancel claimed that this variant could result in a’material decrease’ in the effectiveness vaccines. It could be until the summer 2022 before his company can create a new vaccine. The result would not be satisfactory, he said.
The market was already in a frenzy Friday after early news about the Omicron variant, its large variety of mutations and other reports.
Analysts had expected that the Fed would slow down, as it was wrapping up policies to support the economy during the 2020 pandemic.
Powell said Powell was referring to officials who want the program wrapped up sooner.
Botswana’s variant contains around 50 mutations, and over 30 are spike proteins. The body recognizes the current vaccines as the same version of the virus. However, the changes may change the appearance of the spike protein so that the body’s immune systems is unable to fight off the virus. It can also enter your cells easier thanks to three spike mutations: H665Y (N679K), P681H (P681H). It is also missing NSP6, a membrane protein that was present in older iterations. Experts think this could make the virus more dangerous. Two mutations, R203K and G204R have been identified in the virus. These have been found in most variants of concern and are associated with infectiousness.
President Biden on Monday urged Americans to get vaccinated or get their booster shots amid warnings about the spread of the Omicron variant – but insisted that the infectious new variant was not a cause for ‘panic’ and said no new restrictions were needed.
Biden declared at the White House, “We will fight this variant with scientifically-informed actions and speed. Not chaos and uncertainty.”
Asked if lockdowns were off the table, Biden responded: ‘Yes, for now … If people are vaccinated and wear their masks, there’s no need for lockdowns.’
On Tuesday a representative for South Africa called Biden’s travel ban ‘unfair’ and urged the United States to share more of its vaccine supply as the Omicron variant of COVID spreads around the world.
Xolisa Mbhongo (the deputy permanent representative from South Africa to United Nations) stated Tuesday that they feel the ban against travel was unfair. “South African science must be applauded for discovering the new variant of this virus and sharing that information with the entire world.”
Monday saw the United States enter into a travel ban. Biden said that this would allow scientists more time to research Omicron. Omicron is highly transmissible.
Mabhongo emphasized the importance of vaccine equity for all countries, in order to see the end of COVID.
He stated that if the world continues to operate on the same path regarding vaccine inequalities, COVID will continue. “We believe it’s not smart to continue on this path, and we believe vaccines should all be shared.
“At the moment, less that 10% of Africa’s population has been vaccinated. But, we know from other countries that the rate is higher than 80%. He said that this was a very unfair situation and that he has been calling for countries to correct it.
Biden Administration argues that America is the leading distributor of COVID vaccinations. It points out that over 275 million vaccines have been shipped to 110 countries.
This number also includes Africa’s 93.9million and the 13.3 million who live in countries that are not included in the ban on travel – Botswana and Eswatini and Lesotho.
In October 2021, the Consumer Price Index grew 6.2 percent from one-year ago – it was its highest point since 1990.
Monday’s White House variant was addressed by President Joe Biden, who said there wasn’t need to panic and that people shouldn’t be afraid.
REVEALED : Omicron was present in the Netherlands just five days prior to South Africa alerting the rest of the world.
The Dutch health authorities revealed that Omicron arrived in the Netherlands just five days after South Africa alerted World Health Organisation.
The RIVM medical institute discovered the mutant Covid strain from sampled data ranging back to November 19 and 23.
However, the WHO reported that South Africa was the first to report the variant to UNHCR on November 24, which means the variant had already been transferred all over the globe long before anyone knew.
The RIVM stated that the two samples were tested for PCR and showed abnormal spike proteins. They were then sent to a laboratory for more studies.
Now, the results are back and have been confirmed for Omicron.
These cases may have been identified by travelers returning from South Africa or originated somewhere else.
It could also raise questions about the source of this new variant, which led to restrictions in travel for certain countries.
Today, a South African traveler is subject to the Omicron variant testing upon his arrival at Schiphol Airport in the Netherlands.
South Africa criticised travel bans. The WHO urged against them, however they have had limited impact.
There is much to know about this variant, but the WHO has warned of a’very high global risk’. Early evidence indicates that it may be even more contagious.
The Dutch announcement on Tuesday further blurred the timeline of when the variant will be actually developed.
The Dutch previously claimed that they found this variant in passengers arriving from South Africa on Friday. However, these cases are older than that.