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Lockdown fears weigh on Dow, S&P 500; Nasdaq hits record high

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November 19, 2021

By Ambar Warrick and Devik Jain

(Reuters) – The Dow and the S&P 500 fell on Friday as fears of fresh lockdowns to curb the spread of COVID-19 in Europe hammered banking, energy and airline stocks, while strength in technology pushed the Nasdaq to a record high.

In Europe, a resurgence in COVID-19 cases saw Austria outline plans for a full lockdown, and fears that Germany could follow suit amid a new wave of infections rattled stock markets globally.

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Banking stocks fell about 2.6%, tracking a drop in Treasury yields as investors snapped up safe-haven bonds. Financial was among the worst-performing S&P sectors for the day, down 1.7%. [US/]

Carriers including Delta Air Lines, United Airlines and American Airlines, and cruiseliners Norwegian Cruise Line and Carnival Corp fell between 1.3% and 4.4%.

Major oil firms dropped as crude prices fell on renewed concerns over European demand, pulling the S&P energy sector down 3.4%. [O/R]

“There’s some pandemic risk. However, I don’t believe that the U.S. will head in the direction like Austria. If Germany institutes a full lockdown, that would probably have an impact, again, to the supply chain,” said Tom Mantione, managing director, UBS Private Wealth Management in Stamford, Connecticut.

“The biggest risk here to the market is not legislative policy or pandemic … If the Fed chooses to react quickly and aggressively to persistent inflation, then the markets are going to have a problem.”

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Inflation remains front and center for investors, with recent comments from Federal Reserve officials suggesting that inflation is becoming more broad-based and that expectations for future price increases are rising.

Falling yields supported major technology stocks, which in turn lifted the Nasdaq to a record high.

Alphabet Inc, Amazon.com and Microsoft Corp – stocks which have largely persevered through economic shocks since 2020 – rose between 0.3% and 1.2%, while Netflix and other stay-at-home stocks also gained.

Chipmaker Nvidia rose 3.2% in heavy trade after posting strong quarterly results late Wednesday.

The S&P 500 and the Nasdaq eked out record highs on Thursday following strong technology and retail earnings. The Nasdaq was set to be the best performer this week, while the Dow Jones was set for a second straight week of losses.

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At 10:18 a.m. ET, the Dow Jones Industrial Average was down 221.55 points, or 0.62%, at 35,649.40 and the S&P 500 was down 0.52 points, or 0.01%, at 4,704.02. The Nasdaq Composite was up 82.12 points, or 0.51%, at 16,075.83.

President Joe Biden’s $1.75 trillion bill to bolster the social safety net and fight climate change passed the U.S. House of Representatives on Friday, sending it to the Senate where negotiations will continue.

Among other stocks, Intuit Inc jumped 12.6% as brokerages raised their price targets on the income tax software company after it beat quarterly estimates and raised forecast.

Moderna Inc and Pfizer Inc gained 6.1% and 2.0%, respectively, after the U.S. Food and Drug Administration authorized booster doses of their COVID-19 vaccines for all adults.

Applied Materials Inc dropped 3.2% after the chipmaker forecast first-quarter sales and profit below market estimates on supply chain woes.

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Declining issues outnumbered advancers for a 1.47-to-1 ratio on the NYSE and for a 1.05-to-1 ratio on the Nasdaq.

The S&P index recorded 33 new 52-week highs and four new lows, while the Nasdaq recorded 52 new highs and 141 new lows.

(Reporting by Ambar Warrick and Devik Jain in Bengaluru; Editing by Maju Samuel)

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Yen shines, Aussie sags as Powell turns hawk despite Omicron uncertainty

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December 1, 2021

By Kevin Buckland

(Reuters) – The safe-haven yen held steady on Wednesday, while the risk-sensitive Australian dollar languished near a one-year low after Federal Reserve Chair Jerome Powell signalled a faster taper of stimulus despite the risks around the Omicron COVID-19 variant.

Investors fear that hasty monetary tightening could choke off the nascent economic recovery, with little still known about Omicron’s potential to evade current vaccine protection or how deadly it might be.

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“Investors are staying cautious,” said Shusuke Yamada, chief Japan FX strategist at Bank of America-Merrill Lynch.

“It’s very difficult to make a judgement about the impact of Omicron when we don’t have a lot of information.”

Global markets fell sharply on Tuesday after the head of drugmaker Moderna said existing COVID-19 vaccines would be less effective against the new variant, although BioNTech’s chief executive struck a cautiously positive note, saying the vaccine it makes with Pfizer would likely offer strong protection against severe disease from Omicron.

The Aussie weakened 0.12% to $0.71245 after dipping as low as $0.7063 of Tuesday for the first time since Nov. 3, 2020. The New Zealand dollar was largely flat at $0.68195 after also touching the lowest since early November of last year at $0.6773 in the previous session.

The greenback ticked 0.09% higher to 113.26 yen, but still within sight of an overnight low of 112.535, a level not seen since Oct. 11.

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Powell said in testimony to Congress on Tuesday that Fed officials will discuss at their Dec. 14-15 policy meeting whether to end bond purchases a few months earlier than had been anticipated. The Fed chief finally did an about face on a long-held contention that inflation would be “transitory.”

Powell expressed confidence that the impact from Omicron will be far less than in the spring of 2020, when the pandemic erupted.

In response, traders wound up interest rate hike expectations, with money markets now almost fully priced for tightening at the June meeting.

Powell’s testimony continues later Wednesday.

“Powell’s unexpectedly hawkish tone overnight, essentially asserting that inflation risk has primacy over growth/Omicron risks, should leave the (dollar index) forging ahead,” Westpac strategists wrote in a client note.

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The index, which measures the dollar against six major peers, traded at 95.921 after sliding to 95.544 on Tuesday for the first time since Nov. 18, weighed down largely by an unwinding of bearish bets on the euro, the most heavily weighted component in the basket.

Westpac recommends buying dips in the index down to the mid-95 level.

The single currency slipped 0.04% to $1.1331, down from a two-week high of $1.1387 overnight.

Sterling traded not far from an 11-month low of $1.31945 reached overnight, last changing hands at $1.32955.

(Reporting by Kevin Buckland; Editing by Shri Navaratnam)

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OPEC+ begins two days of talks amid oil rout

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December 1, 2021

LONDON (Reuters) – OPEC and its allies begin two days of meetings on Wednesday to decide whether to release more oil into the market or restrain supply amid an oil price rout and fears the Omicron coronavirus variant could weaken global energy demand.

Oil prices fell to near $70 a barrel on Tuesday from as high as $86 in October, posting their biggest monthly decline since the outset of the pandemic, as the new variant raised fears of a supply glut.

For November, Brent fell by 16.4%, while WTI fell 20.8%, the biggest monthly fall since March 2020.

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“The threat to oil demand is genuine,” said Louise Dickson, senior oil markets analyst at Rystad Energy. “Another wave of lockdowns could result in up to 3 million bpd (barrels per day) of oil demand lost in the first quarter of 2022.”

Also pressuring prices, Federal Reserve Chair Jerome Powell said the U.S. central bank likely will discuss speeding its reduction of bond purchases amid a strong economy and expectations that a surge in inflation will persist.

The Organization of the Petroleum Exporting Countries (OPEC) will meet on Wednesday after 1300 GMT, followed by a meeting on Thursday of OPEC+, which groups OPEC with allies including Russia.

Several OPEC+ ministers, including from Russia and Saudi Arabia, have said there was no need for a knee-jerk reaction from the group.

But some analysts have suggested OPEC+ might put plans to add 400,000 barrels per day (bpd) to supply in January on hold.

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The group was already weighing the effects of last week’s announcement by the United States and other countries to release emergency crude reserves to temper energy prices.

OPEC+ has been gradually winding down record supply cuts of 10 million bpd implemented last year and currently has some 3.8 million bpd of reductions still in place.

The increase in OPEC’s oil output in November has again undershot the rise planned under a deal with allies, a Reuters survey found.

(Reporting by OPEC team, writing by Dmitry Zhdannikov, editing by Richard Pullin)

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New York accuses Amazon of backsliding over worker safety, seeks monitor

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December 1, 2021

By Jonathan Stempel

NEW YORK (Reuters) -New York state’s attorney general on Tuesday asked a state judge to appoint a monitor to oversee worker safety at an Amazon.com Inc fulfillment center in New York City, citing the retailer’s alleged rollbacks of COVID-19 safety measures that were “already inadequate.”

Letitia James, the attorney general, also wants a court order requiring the rehiring of Christian Smalls, who Amazon fired for allegedly violating a paid quarantine by leading a March 2020 protest over conditions at the Staten Island facility.

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James, a Democrat running to become New York governor, sued https://www.reuters.com/article/us-amazon-com-complaint/new-york-attorney-general-sues-amazon-over-covid-19-shortfalls-idUSKBN2AH0C2 Amazon in February in a New York state court in Manhattan over its safety protocols for thousands of workers at the Staten Island facility and a distribution center in the New York City borough of Queens.

She said Amazon is valuing profit over safety and “acting as if the pandemic is over” by rolling back safety protocols even as the Omicron variant https://www.reuters.com/business/healthcare-pharmaceuticals/omicron-variant-could-outcompete-delta-south-african-disease-expert-says-2021-11-30 of the COVID-19 virus threatens to increase transmission rates.

The alleged rollbacks include making the Staten Island facility “mask-optional” for vaccinated workers while not requiring masks for unvaccinated workers, and failing to enforce social distancing.

In her motion for a preliminary injunction, James said the proposed monitor would oversee upgraded cleaning, hygiene and social distancing procedures.

“While case rates, hospitalizations, and deaths rise, Amazon rescinds protections and packs in more workers for its holiday rush,” James said in her motion. “Amazon’s ongoing – and worsening – failure to protect workers must be halted.”

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Amazon said in a statement it has taken a “comprehensive approach” to COVID-19 safety.

“It’s disappointing that the Attorney General is seeking to politicize the pandemic by asking for ’emergency’ relief now despite having filed this lawsuit nine months ago,” Amazon said.

The Seattle-based company is appealing a judge’s refusal in October to dismiss James’ lawsuit.

Amazon on Nov. 15 reached a separate settlement with California https://www.reuters.com/legal/government/amazon-settles-california-claims-it-concealed-covid-19-cases-workers-2021-11-15 over claims it violated a state “right-to-know” law by concealing from warehouse workers and local health agencies the numbers of workers being infected with COVID-19.

(Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis and Stephen Coates)

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