The stock market has been in Haywire since the researchers found out about the Omicron variant. It once again raises the question: Will the pandemic be able to damage the global economy?
The new market has started to have some positive effects since the Covid-19 outbreak roughly two years ago. Unfortunately, the virus is going in the opposite direction to Wall Street’s prediction; they do not know whether people would travel, shop or even go to the offices for work. With every new phase of the pandemic, there is a requirement for new SOPs, border closings, new rules for public gathering, and new types of testing in place.
Researchers know very little about the new Omicron variant, and it, unfortunately, includes how much protection the vaccines can provide. Nevertheless, the market seems to take the news very steadily and firmly and not panic like the earlier outbreaks.
These ups and downs have a pattern to them, and the pandemic has driven volatility in the stock market since February 2020. Still, these are just short bursts, and it becomes shorter after every recovery as it reaches a new high. We can take an example of the S&P 500 through Monday and recovered almost all its losses before it had touched its last peak, and this happened after Nov.26, when Omicron was officially announced.
The stock market has always been a judge, jury in this pandemic. It has fallen short because of the pandemic and gone down time to time but rose again because of the new vaccine and new treatment technology advancements. There were times when the stock market wasn’t parallel to the pandemic. Talking about Wall Street, it has performed well. Sometimes, it never took the count of the human lives the pandemic has a cost and zeroed in on various factors that would drive corporate profits, like government spending and low-interest rates.
The Federal Reserve stated that the market recovers after dips caused by the pandemic. It is taking countermeasures to chop down the borrowing costs and keep the money circulation going in the financial system. The market fall was silenced by introducing vaccines and booster shots, and various medical treatments. These also showed the market in a different light where it was seen recovering and growing faster than anticipated. All of this happened while the number of cases was plumbing up. It started to hinder soon after the official announcement of Omicron. We, at times, tend to forget how random this world is and the threats it still has to face.
For the last few weeks, the economists at Wall Street have been holding back their forecast while others are forecasting a more nominal economic growth. The forecasters are reasoning that the new variant could put a hurdle in the reopening. In addition, there are rumors and opinions around in the market that the new variant will have harsher effects on the ongoing global supply chains problem.
If more strict lockdowns are forced, many factories could have been shut globally, directly affecting the supply chain, causing a global shortage of pretty much everything. These lockdowns have been an important reason that prices of almost everything are shooting new heights, even startling the expectations sent by the economist. One of the main reasons the Federal Reserve had to act and tone down the price gains was adding the recent bumps in the market.