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Market Turns Cautious, Stocks  Lower   12/01 16:00

   Another roller-coaster ride on Wall Street whipsawed investors Wednesday as 
an early market rally reversed course by midafternoon, piling up more losses 
for stocks.

   (AP) -- Another roller-coaster ride on Wall Street whipsawed investors 
Wednesday as an early market rally reversed course by midafternoon, piling up 
more losses for stocks.

   The S&P 500 had been up 1.9% in the early going following some 
better-than-expected readings on the U.S. economy, but the gains gradually gave 
way to a 1.2% skid. The afternoon reversal is the latest dizzying move for Wall 
Street's benchmark, which sank 2.3% on Friday for its worst loss since 
February, only to then rise 1.3% on Monday and then fall 1.9% on Tuesday.

   The Dow Jones Industrial Average ended with a 1.3% loss, while the Nasdaq 
composite fell 1.8%. Both indexes had been solidly higher until the market's 
afternoon swoon.

   The wild movements are partly the result of investors struggling to handicap 
how much damage the newest coronavirus variant will do to the economy. Markets 
were already headed lower Wednesday afternoon when the White House announced 
that the first case of the omicron variant had been found in the U.S., in a 
person who recently had returned from South Africa.

   "Investors are going to have to get used to the idea that this is not going 
to be the last variant," said Liz Young, chief investment strategist at SoFi. 
"This is likely something that is with us for a while and we have to learn to 
live with it and manage growth from an investment standpoint."

   Another weight dropped on Wall Street Tuesday when the head of the Federal 
Reserve said that it may halt its immense support for financial markets sooner 
than expected amid persistently high inflation sweeping the world.

   But since climbing out of its early 2020 collapse caused by the first wave 
of COVID-19, one hallmark of the stock market's powerful run has been the 
continued willingness by bargain-hunting investors to buy following any dip in 
prices. That lasting habit has helped the S&P 500 set 66 all-time highs so far 
in 2021, the second-most on record for a year, according to S&P Dow Jones 
Indices.

   It also helped the Dow initially climb 520 points Wednesday. The blue chip 
index ended up dropping 461.68 points to 34,022.04. The Nasdaq slid 283.64 
points to 15,254.05, while the S&P 500 fell 53.96 points to 4,513.04.

   Smaller company stocks fared worse than the broader market. The Russell 2000 
index fell 51.49 points, or 2.3%, to 2,147.42. It had been up as much as 2.5% 
earlier.

   Longer-term Treasury yields initially recovered some of their sharp drops 
from the day before, triggered by worries about slowing economic growth. But 
the rebound didn't last. The yield on the 10-year Treasury slid to 1.41% from 
1.44% late Tuesday, when it fell from 1.52%.

   Some better-than-expected data on the economy failed to avert the late-day 
wave of selling. A report from the Institute for Supply Management showed that 
growth in the U.S. manufacturing sector accelerated a touch faster last month 
than economists expected.

   A separate report from payroll processor ADP said that non-government 
employers hired more people in November than economists expected. That could 
raise expectations for Friday's more comprehensive jobs report from the U.S. 
government, though the ADP report doesn't have a perfect track record 
predicting it.

   A stronger economy would burn more fuel, and crude oil prices initially 
rose, briefly sending Benchmark U.S. crude 2.1% higher. But it shed those 
gains, closing down 0.9% at $65.57 per barrel. It momentarily dropped below $65 
the day before.

   Vertex Pharmaceuticals rallied 9.7% for the biggest individual gain in the 
S&P 500 after it reported encouraging data from a study of its investigational 
treatment for kidney disease. More than 80% of stocks in the S&P 500 fell.

   Travel stocks had some of the biggest swings Wednesday. Norwegian Cruise 
Line climbed 4.6% in morning trading, but ended with an 8.8% loss. American 
Airlines flipped from a 3.1% gain to an 8% loss.

   A measure of fear on Wall Street jumped 14.5%. The VIX, which shows how 
worried investors are about upcoming drops for the S&P 500, is still well above 
where it was before omicron walloped markets worldwide after Thanksgiving.

   "The biggest driver of the near-term volatility has been omicron," said 
Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "It 
clouds near-term visibility, and it's just simply too early to tell the extent 
to which it will evade existing vaccines and how severe it will be relative to 
other mutations. It's the big unknown."

   The possibility of less help for markets from the Fed continues to hang over 
Wall Street. Chair Jerome Powell said Tuesday the central bank will consider an 
earlier halt to its monthly purchases of bonds, which are meant to goose the 
economy by keeping rates low for mortgages and other long-term loans.

   That would open the door for the Fed to raise short-term interest rates, 
diluting one of the main reasons for the S&P 500's more than doubling since 
late March 2020. Low rates encourage investors to pay higher prices for stocks 
and have helped deflect criticism that the market had become too expensive. So 
a faster ramp up in short-term rates threatens stocks, but analysts say it 
could also be an encouraging signal about the Fed's confidence in the economy's 
strength.

   Analysts also warn that the market is likely to remain jumpy until more 
clarity arrives on omicron's ultimate impact. With no answer yet on the 
effectiveness of vaccines against the variant, it's only a guess on whether 
governments will reinstate tough restrictions, people will be scared away from 
businesses or inflation will worsen.

 
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