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A number of economic policies continue to make their way into the stock market, most of which have the potential to induce a targeted rally in key aspects of the market.

The United States stock market has refused to print a bullish rally, but rather, has taken another plunge on Monday as investors weigh in more on the fast-spreading Omicron variant of the coronavirus.

The S&P 500 (INDEXSP: .INX) slumped 1.14% to 4,568.02, nosediving as much as 3.01% over the past three days. The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) dropped 1.24% to 14,980.94, and the Dow Jones Industrial Average (INDEXDJX: .DJI) retracted 1.23% to end Monday’s session at 34,932.16. Russell 2000 Index (INDEXRUSSELL: RUT) nosedived 1.57% to 2,139.87.

Omicron is coming off as a virus of great concern as the winter holidays draw closer. Despite efforts to curtail the spread of the virus, the United States recorded more than 156,000 cases on Friday. The Omicron strain has now been discovered in at least 90 countries of the world, and investors are agitated about the potential economic impact this might usher in in the near year.

The slump in the stock market is arguably “reflecting growing uncertainty surrounding whether the omicron surge will bring new widespread economic shutdowns, an unexpected shelving of additional fiscal stimulus from President Biden’s Build Back Better plan, and a breach by the S&P 500 index of its 50-day moving average,” said Jim Paulsen, Chief Investment Strategist at the Leuthold Group.

Industries positioned to be impacted the most by the Omicron surge include travels and airlines, and the banking industry buckled under the weight of the news. Delta Air Lines Inc (NYSE: DAL) recorded a slight slip of 0.49% to $36.37. Booking Holdings Inc (NASDAQ: BKNG) also took a negligible plunge as investors still weigh in on the direct impact the extended pandemic will have on the company.

Tech stocks took a massive beating but Netflix Inc (NASDAQ: NFLX) defied all odds to add a 1.19% gain at a share price of $593.74.

US Stock Rally and the Build Back Better Plan

A number of economic policies continue to make their way into the stock market, most of which have the potential to induce a targeted rally in key aspects of the market. Conservative Democrat Senator from West Virginia, Joe Manchin has revealed that President Joe Biden’s Build Back Better spending currently pegged at about $1.75 trillion will not be getting his support.

The Senator’s position jeopardizes the chances of the bill aimed at social spending and climate policy bill.

“In light of Manchin’s comments, the odds have clearly declined and we will remove the assumption from our forecast,” Goldman’s economist Jan Hatzius wrote. “With headline CPI reaching as high as 7% in the next few months in our forecast before it begins to fall, the inflation concerns that Sen. Manchin and others have already expressed are likely to persist, making passage more difficult.”

Before investors take in the potential impact of this showdown in the long run, pharmaceutical companies are doing all they can to allay fears from the Omicron virus as Pfizer Inc (NYSE: PFE), and Moderna Inc (NASDAQ: MRNA) have affirmed through clinical trials that their current vaccines are effective against the ravaging variant.


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