The Nasdaq Index is experiencing a decidedly mixed week on the back of fears over the spread of the Omicron variant and new US economic policies in response to inflation.
How the Nasdaq Index is performing
It all started last Tuesday with Fed Chairman Jerome Powell‘s words opening the door to more aggressive tapering. On Tuesday, the Nasdaq Index dropped 1.55% to 15,537.70. Yesterday, the index seemed to rebound, but in the evening a new wave of sales brought the Nasdaq down 1.8% to 15,254 points.
The Nasdaq gave up over 500 points, yesterday experiencing one of its biggest losses since June 2020.
The Nasdaq was obviously not an isolated case. Other US indices such as the S&P 500 and the Dow Jones also lost ground, both down 1.2%.
Covid-related fears for the US economy
Fears about the impact of a new pandemic on the US economy were the main cause of these fears.
Yesterday, the first case of the Omicron variant was recorded. It is a man from California who returned on 22 November from a trip to South Africa. He has mild symptoms and is in home isolation. In fact, the arrival of the Omicron variant is not surprising – it was inevitable.
Although the symptoms are mild, there is a risk that this variant will be more resistant to vaccines. This is why the US is also pushing to strengthen the vaccination campaign and get people to take a third dose of the vaccine.
In addition, restrictions are being considered for travellers entering the US, not only from countries where the Omicron variant is more widespread.
In addition to all this, there is the danger of inflation. In recent days President Joe Biden had spoken of a transitory moment, but on Tuesday he was practically contradicted by Fed Chairman Jerome Powell, who said that inflation was set to remain. It has not been this high since the 1990s. Even Jerome Powell had to change his mind. As long as the pandemic continues, there can be no certainty that the economy will recover.
This worries investors and it is no coincidence that purchases of safe-haven assets, particularly gold and Bitcoin, are increasing.