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* Communications services, materials lead sector declines
* Fed's Powell floats dropping "transitory" label for
* U.S. consumer confidence ebbs in November
* Indexes down: Dow 1.44%, S&P 1.34%, Nasdaq 1.25%
Nov 30 (Reuters) - Wall Street's main indexes fell more than
1% on Tuesday after Federal Reserve Chair Jerome Powell signaled
that the U.S. central bank would consider speeding up its
withdrawal of bond purchases as inflation risks increase, piling
pressure onto a market already nervous about the latest COVID-19
In a testimony before the Senate Banking Committee, Powell
indicated that he no longer considers high inflation as
"transitory" and that the Fed would revisit the timeline for
scaling back its bond buying program at its next meeting in two
While investors were already in a selling mood due to
uncertainty around the impact of the Omicron coronavirus
variant, it did not help that Powell's comments also prompted
speculation about an potential acceleration in interest rate
"The principal contributor to the decline in stock prices
today is the Powell commentary, regarding the upcoming Fed
meeting, about accelerating the tapering of their bond buying
program, which obviously leads to the prospect that rate hikes
come sooner next year," said Mark Luschini, chief investment
strategist at Janney Montgomery Scott in Philadelphia.
"That somewhat hawkish shift in tone caught the market
flatfooted," Luschini said.
Meanwhile, the market also faced uncertainty about how
dangerous the Omicron variant could be, the degree to which
current vaccinations could offer protection and the additional
restrictions governments will have to impose that could hurt the
economy, Luschini added.
"The market's going to have a pall cast over it until we
have more evidence as to exactly what this new variant is going
to mean," he said.
By 2:34 p.m. ET (1934 GMT), the Dow Jones Industrial Average
fell 507.06 points, or 1.44%, to 34,628.88, the S&P 500
lost 62.39 points, or 1.34%, to 4,592.88 and the Nasdaq
Composite dropped 197.39 points, or 1.25%, to 15,585.45.
The declines were broad-based, with all the 11 major S&P
sectors down. Communication services was the lead
decliner, dropping more than 2%, followed by materials
and energy. S&P 500 Banks were down 1.7%.
While the Food and Drug Administration said it hopes to have
information about the effectiveness of current COVID-19 vaccines
against Omicron, vaccine companies appeared to be divided.
BioNTech's chief executive told Reuters the
BioNTech and Pfizer COVID-19 vaccine will likely offer
strong protection against severe disease from the variant, while
Moderna Inc's CEO told the Financial Times that
COVID-19 shots are unlikely to be as effective against the new
variant as they have been previously.
Moderna shares were down 4%, while Regeneron Pharmaceuticals
Inc fell about 2% after it said its COVID-19 antibody
treatment and other similar drugs could be less effective
Travel and leisure stocks slumped, with S&P 1500 Airlines
and the S&P 1500 Hotels, Restaurant and Leisure
indexes both sliding around 2% over concerns of more
border restrictions to curb the spread of the new variant.
The small-cap Russell 2000 index was down 1.9%.
The uncertainty has triggered fresh alarm at a time when
supply chain logjams are weighing on economic recovery and
central banks globally are contemplating a return to
pre-pandemic monetary policy to tackle a surge in inflation.
Meanwhile, data showed U.S. consumer confidence slipped in
November amid concerns about the rising cost of living and
relentless COVID-19 pandemic.
Declining issues outnumbered advancing ones on the NYSE by a
4.77-to-1 ratio; on Nasdaq, a 3.32-to-1 ratio favored decliners.
The S&P 500 posted seven new 52-week highs and 43 new lows;
the Nasdaq Composite recorded 24 new highs and 559 new lows.
(Reporting by Devik Jain and Ambar Warrick in Bengaluru;
Editing by Marguerita Choy and Sriraj Kalluvila)