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Wall Street falls on Omicron worries ahead of Fed meeting

Wall Street has ended lower, 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 per cent of COVID-19 infections in London and at least one death in the United Kingdom.


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


“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.”


Most of the 11 major S&P 500 sector indexes fell, with only defensive sectors - including consumer staples, utilities and real estate - gaining.


The Dow Jones Industrial Average fell 0.89 per cent to end at 35,651.61 points, while the S&P 500 lost 0.91 per cent to 4,669.15.


The Nasdaq Composite dropped 1.39 per cent to 15,413.28.


Following Monday’s dip, the S&P 500 remains up about 24 per cent year to date.


Apple dipped, 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 $US3 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 bring 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,” Ryan Jacob, chief portfolio manager at Jacob Internet Fund, said.


“There’s an expectation that there will be an acceleration of tapering, and there’s a little anxiety leading up to that,”


Positive updates about vaccines and antibody cocktails to combat Omicron, along with a recent reading on inflation that was in line with consensus, pushed the S&P 500 index to a record closing high on Friday.


Pfizer rose 4.6 per cent after it agreed to acquire Arena Pharmaceuticals in a $US6.7 billion all-cash deal. Arena’s shares surged about 80 per cent.

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