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Wall Street Opens Lower as Risk Appetite Dries up Ahead of Fed; Dow Down 130 Pts

Stock Markets6 hours ago (Dec 13, 2021 15:32)

© Reuters.

By Geoffrey Smith — U.S. stocks opened lower on Monday as risk appetite dried up ahead of the Federal Reserve’s policy-setting meeting that takes place on Tuesday and Wednesday.

By 9:45 AM ET (1445 GMT), the Dow Jones Industrial Average was down 133 points, or 0.4% at 35,937 points. The S&P 500 was down 0.2% and the Nasdaq Composite was down less than 0.1%. 

The market has had the weekend to digest a set of inflation figures that give the Fed all the justification it needs to accelerate the phase-out of its bond purchases and move up its first rate hike already to a point in the first half of 2022. The only factor likely to stay its hand has seemed to be the emergence of the new Omicron strain of Covid-19, but there is little evidence yet that it will provoke the kind of economic slowdown that would hold the central bank back from tightening. 

Analysts have increasingly voiced concern at the ever-narrower strength of the market. Performance this year has been concentrated in a handful of more defensive, high-quality stocks such as Apple and Amazon, while the majority of S&P 500 stocks are below their 100-day moving average, typically a reliable indication of near-term weakness. Apple (NASDAQ:AAPL) stock again was the beneficiary of ‘safe haven’ flows, rising 0.8%. 

Risk aversion was evident in other asset markets too, with cryptocurrencies falling again at the end of a year when it is all too easy for older investors in particular to take profits. Crude oil futures also fell, despite a forecast from the Organization of the Petroleum Exporting Countries that it expected any hit to global demand from Omicron to be brief and shallow.

Tesla (NASDAQ:TSLA) stock fell 2.9% as CEO Elon Musk was named as Time’s Person of the Year, an accolade that has had the unfortunate reputation of a lagging indicator in the market over the years. (NASDAQ:AMZN) stock fell some 94% in the two years after founder Jeff Bezos won the same award in 1999. 

Elsewhere in the electric vehicle space, Lucid Group (NASDAQ:LCID) stock rose 4.0% after the company priced its exchangeable bonds more tightly than feared, reducing the dilution risk to existing shareholders. And in a twist on the EV narrative, Harley-Davidson (NYSE:HOG) stock soared over 15% to its highest in over five months after announcing it will spin off its electric bike unit LiveWire into a SPAC. It will still hold nearly three-quarters of the unit’s equity.

In other news, Arena Pharmaceuticals (NASDAQ:ARNA) rose over 80% after agreeing to be bought by Pfizer in a deal worth $6.7 billion. Pfizer (NYSE:PFE) stock, which hit a new all-time high last week, rose 4.3%, helped by an Israeli study that supported early trial data showing that a third dose of its Covid-19 vaccine protects effectively against the Omicron strain.

Wall Street Opens Lower as Risk Appetite Dries up Ahead of Fed; Dow Down 130 Pts

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