Financial markets reeled Tuesday after vaccine-maker Moderna predicted the omicron variant would inflict a “material drop” in their COVID-19 shots’ power and Federal Reserve Chairman Jerome Powell said the viral strain could produce “downside” risks to in-person work and supply chains.
Moderna CEO Stephane Bancel, speaking to The Financial Times, said there is “no world” in which COVID-19 vaccines are as effective against the variant discovered in South Africa as they are against the delta variant that dominates now, spooking Wall Street before trading even began.
“I think it’s going to be a material drop. I just don’t know how much because we need to wait for the data. But all the scientists I’ve talked to … are like, ‘This is not going to be good,’” Mr. Bancel said, offering a more dismal view than Dr. Anthony Fauci and other scientists who feel any decrease in vaccine effectiveness will not be grave.
The Dow Jones Industrial Average dropped over 650 points, nearly 1.9% after Mr. Powell told Congress the Fed might speed up its plan to pull back on monthly purchases of $120 billion in government-backed securities, a practice designed to support financial markets amid the pandemic. He said the Fed will debate in December whether to begin “wrapping up the taper of our asset purchases, which we actually announced at our November meeting, perhaps a few months sooner.”
Mr. Powell said the central bank’s thinking could change as they get more information about the omicron variant that’s spread to multiple continents.
“The recent rise in COVID-19 cases and the emergence of the omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,” Mr. Powell testified to the Senate Banking, Housing, and Urban Affairs Committee. “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions.”
The S&P 500 dropped 88 points or 1.9%, and the Nasdaq composite closed down 245 points, or 1.5%.
Financial markets went into a tizzy even as the White House told Americans to take a deep breath and wait for scientists to pore over viral samples that should answer key questions around the omicron variant, including whether it causes more severe disease. Some early patients in South Africa did not suffer from severe illness and didn’t lose their taste or smell, though scientists cautioned they were on the younger side and the pandemic tends to inflict its worst damage on older adults.
“Be careful about bread crumbs, they might not tell you what kind of loaf of bread you have,” Dr. Fauci, director of the National Institute of Allergy and Infectious Diseases, told a White House reporter who asked him to talk about what the early “crumbs” of data reveal.
Michael Mina, an assistant professor of epidemiology at the Harvard T.H. Chan School of Public Health, told the media to “please stop repeating anecdotes that physicians have seen mild cases of omicron.”
“The VAST majority of COVID cases of all variants are mild. The problem is a fraction are not, and when cases pile up, the fraction adds to a lot of hospitalization, death, and long-COVID,” he tweeted.
White House officials said there have been 205 known cases of omicron from 18 countries, although not in the U.S.
Dutch officials on Tuesday said they found the omicron variant in a sample collected on Nov. 19, indicating it was present in Europe before it burst into view last week and countries put restrictions on air travel from South Africa and surrounding nations.
Rochelle Walensky, the director of the Centers for Disease Control and Prevention, said it is collecting samples from all states and territories and, so far, 99.9% of all sequenced samples remain the delta variant that took over during the summer.
Vaccine makers say it will take at least two weeks to assess how damaging omicron is to the shots’ dome of protection. They are drafting plans to develop a booster shot that is specifically tailored to omicron, but it would take at least three months to get it out the door and more time to manufacture it at scale.
In the meantime, drugmakers and federal scientists say existing boosters should offer additional protection against the virus and its variants, so there is no reason to wait for an omicron-specific booster that might not materialize.
“We’re still waiting for more data but what remains true is that our best protection against the virus remains the vaccine. People should get vaccinated and boosted. At this point, I’m confident that our recovery remains strong,” Treasury Secretary Janet Yellen told lawmakers.
Likewise, Pfizer CEO Albert Bourla tweeted “the best hedge” against omicron is to get fully vaccinated and boosted as recommended. He said his company can make an omicron-specific vaccine within 100 days.
Mr. Bancel, the chief of Moderna, said it would take several months to produce an omicron-specific vaccine at scale. His company is exploring whether a high dose of its existing booster shot suffices against omicron, especially for seniors and the medically frail.
During a White House briefing, Dr. Fauci said COVID-19 vaccines were built to target the ancestral strain from Wuhan but the shots spur a big enough antibody response and trigger the immune system to suppress most variants.
“You get a level so high that even if the mutations of various variants diminish that level of protection, you are still within the range of some degree of protection,” Dr. Fauci said. “And that’s usually most manifested in protection against severe disease that leads to hospitalization.”
“We’re hoping and I think, with good reason, to feel good that there will be some degree of protection,” he said.
Markets don’t like uncertainty, however, and the sour mood is infecting consumer confidence, which dropped to its lowest level in nine months.
The consumer confidence index declined to 109.5 from 111.6 in October amid concerns about inflation, the Conference Board, a nonprofit that tracks the metric, said Tuesday.
The Expectations Index that takes stock of how consumers feel about income, business and employment conditions in the near term also fell, to 87.6 from 89.
Mr. Powell said the Fed will have to monitor a variety of factors as it decides what to do about inflation and whether omicron poses a major threat.
“It’s really about transmissibility, the ability of existing vaccines to address any new variant and it’s about the severity of the disease once it’s contracted,” he told lawmakers.
Experts say they’ll “know quite a bit about those answers within about a month. We’ll know something, though, within a week or 10 days, and then and only then can we make an assessment of what the impact would be on the economy,” Mr. Powell testified. “For now it’s a risk. It’s a risk to the baseline it’s not really baked into our forecast.”
For more information, visit The Washington Times COVID-19 resource page.
