Omicron Worries Weigh On Wall Street

Wall Street ended lower on Monday, with shares of Carnival and several airlines tumbling as investors worried about the Omicron coronavirus variant ahead of a Federal Reserve meeting later this week.

Travel-related stocks fell, with the fast-spreading variant accounting for around 40 percent of Covid-19 infections in London and at least one death in the United Kingdom.

Norwegian Cruise Line, Carnival and Royal Caribbean Cruises all slumped more than 4 percent, while the S&P 1500 airlines index shed about 3 percent.

"It's transportation, restaurants, all the things that if it got bad enough that we started putting new restrictions on people, it would not be good for them," said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta. "They have all been bid over the past several months by the idea that we were going to get back to business as usual."

The Dow Jones Industrial Average fell 0.89 percent to end at 35,652 points, while the S&P 500 lost 0.91 percent to 4,669. The Nasdaq Composite dropped 1.39 percent to 15,413.

Apple dipped 2.1 percent, even after JP Morgan raised its price target on the iPhone maker to the highest on Wall Street. The company is close to becoming the first in the world to hit US$3 trillion in market value.

Investors expect an increasingly hawkish tone out of the Federal Reserve's two-day meeting that wraps up on Wednesday. The US central bank is expected to signal a faster wind-down of asset purchases, which could also usher closer a start to interest rate hikes.

"Everyone is focused on the Fed this week and what guidance we get in terms of bond purchases and interest rates. There's an expectation that there will be an acceleration of tapering, and there's a little anxiety leading up to that," said Ryan Jacob, chief portfolio manager at Jacob Internet Fund.

Pfizer rose 4.6 percent after it agreed to acquire Arena Pharmaceuticals in a US$6.7 billion all-cash deal. Arena's shares surged 80 percent. (Reuters)