* U.S. indexes sharply lower; S&P on course to confirm
correction
* Tech, energy down most among S&P sectors
* Euro STOXX 600 index slides ~3.5%
* Dollar rises, gold ~flat; crude off, bitcoin down ~6%
* U.S. 10-Year Treasury yield falls to ~1.73%
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MARKIT PMI: OMICRON THROWS MONKEY WRENCH INTO U.S. BUSINESS
ACTIVITY (1041 EST/1541 GMT)
The U.S. economy kicked off 2022 with a deceleration in
business activity as it approached the hazardous turns and
slippery conditions caused by Omicron.
Global financial information firm IHS Markit's advance,
"flash" purchasing managers' index (PMI) for manufacturing
and services sectors both fell more
than expected, to respective readings of 55 and 50.9.
Combined, the indexes result in the lowest composite PMI
print in 18 months.
A PMI reading over 50 signifies increased activity over the
previous month.
Spiking infections due to the highly contagious Omicron
COVID-variant are the main culprit for sending customer-facing
services activity tumbling perilously close to contraction
territory.
Output stalled as the new wave of COVID infections
exacerbated existing supply and labor shortages.
"Soaring virus cases have brought the US economy to a near
standstill at the start of the year, with businesses disrupted
by worsening supply chain delays and staff shortages, with new
restrictions to control the spread of Omicron adding to firms’
headwinds," writes Chris Williamson, chief business economist at
IHS Markit.
But the good news is that Omicron doesn't appear to be
hitting demand so much as adding complications to the already
tangled supply chain.
"Output has been affected by Omicron much more than demand,
with robust growth of new business inflows hinting that growth
will pick up again once restrictions are relaxed." Williamson
adds.
Hinting at another silver lining, cost inflation pulled back
to its slowest pace since March, while selling prices for goods
and services registered the third-fastest rate on record, going
back to October 2009.
Wall Street is sharply lower in morning trading extending
its biggest weekly percentage plunge since March 2020, when
measures to contain the new pandemic sent the economy into its
steepest and most abrupt downturn in history.
The S&P 500 is on track to confirm a correction. It
is last down 10.1% from its January 3 finish.
(Stephen Culp)
*****
WALL STREET TUMBLES AS WORRIES PILE ON (0944 EST/1444 GMT)
Wall Street's three major indexes tumbled on Monday with
Nasdaq down 2% leading the declines as the prospect of a Russian
attack on Ukraine roiled global markets ahead of a Federal
Reserve policy meeting later this week.
Also on investors minds was a sell off last week with the
main indexes ending sharply lower Friday as Netflix shares set
the tone with a plunge after a weak earnings report, capping the
S&P 500 and Nasdaq's biggest weekly percentage drops since the
onset of the COVID-19 pandemic in March 2020.
NATO said on Monday it was putting forces on standby and
reinforcing eastern Europe with more ships and fighter jets, in
what Russia denounced as an escalation of tensions over Ukraine.
President Joe Biden has begun considering options for boosting
U.S. military assets in the region, senior administration
officials said.
This week's Fed meeting is expected to shed more light on
the central bank's plans for policy tightening including
interest rate hikes.
The S&P's 11 major sectors are in the red with defensives
such as consumer staples and utilities
losing the least ground, while growth stocks and cyclicals are
among leading decliners with consumer discretionary
and financials sliding.
Here is your opening snapshot:
(Sinéad Carew)
*****
DOW INDUSTRIALS: SLIP TURNS TO SLIDE (0900 EST/1400 GMT)
After ending January 4 at a record close of 36,799.65, the
Dow Jones Industrial Average has now collapsed nearly 7%
in just 12 trading days.
Much of this decline has come with a current six-day,
near-6%, losing streak. And with CBT e-mini Dow futures
reversing an overnight gain of 253 points, and now pointing to a
loss of around 250 points at the open, the blue-chip average may
threaten a seventh-straight day of losses.
The Dow last fell seven days in a row in February 2020, in
the early stages of what would ultimately prove to be a 37%
meltdown on a closing basis. The Dow last declined
eight-straight days in June 2018.
Therefore, at least shorter-term, in terms of its streak,
the DJI may be getting stretched to the downside.
Of note, the DJI ended Friday essentially right on its
broken weekly log-scale resistance line from 1929, which has
been acting as support since it was overwhelmed early last year.
However, with opening weakness, the DJI will be below this line,
which will ascend to around 34,300 this week:
Additional Dow support can be found at its mid-to-late 2021
troughs at 34,006, 33,613 and 33,271.
The 23.6% and 38.2% Fibonacci retracements of the entire
March 2020 to January 2022 advance are found at 32,530 and
29,794. The Dow's February 2020 peak was at 29,568.
In the event of sudden strength, which puts the DJI back
over the line from 1929, it will still have work to do to repair
its recent damage. This, given that its 40-week and 10-week
moving averages are now resistance, and ended at 35,030 and
35,511 last Friday.
(Terence Gabriel)
*****
FOR MONDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)