After advancing as much as 1.9% earlier in the day, the S&P 500 had given up most of these gains by late afternoon, while the Dow and Nasdaq turned negative.
The U.S. Centers for Disease Control confirmed the first case of the Omicron variant detected in the country and that the person had returned from South Africa on Nov. 22.Wall Street had tumbled on Tuesday after Fed Chair Jerome Powell said the central bank would consider accelerating the withdrawal of its bond buying program at its December meeting amid a surge in inflation and stronger economy.
On Wednesday, Powell said policymakers needed to be ready to respond to the possibility that inflation may not recede in the second half of next year as expected.Lauren Goodwin, economist and portfolio strategist at New York Life Investments, said it was not surprising to see volatility as investors digest substantial uncertainties including the lack of information on the Omicron variant and the latest signals from the Fed which are both "potentially major changes in market expectations.
However, investors were also reacting to positive economic data that came out on Wednesday morning "reminding investors that the economic and corporate backdrop for this market is really strong." "For many investors, this volatility is a buying opportunity," said Goodwin, who pointed to strong private payroll and purchasing managers data.
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