Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.

2021-11-28 11:30

The Dow Jones tumbled by over 900 basis points for its single worst session in the calendar year. The NASDAQ and S&P 500 slumped by over 2.0% each, and the price of crude oil fell by over 13%. It wasn’t just stocks either. The crypto markets hit freefall, with Bitcoin (BTC) officially approaching a bear market as the benchmark crypto hits losses of upwards of 20% from all-time highs hit earlier this month. The world had seemingly been flipped on its head during Thanksgiving, so what was the cause of all of this? Omicron. 

It is a word we will likely be hearing for some time. Omicron is the fifteenth letter of the Greek alphabet, and their version of the letter ‘O’. But today, Omicron is the latest variant of the novel coronavirus that has been discovered in South Africa. The news from the World Health Organization was a gut punch that winded those of us who believed we were on the home stretch of putting COVID-19 behind us once and for all. 

So how will this affect the markets? First, we still don’t know the severity of the Omicron variant, although officials in the White House believe it is inevitable that this variant will spread. Like the Delta Variant before it, this will no doubt call for a further delay in regards to easing of travel restrictions. As well, it will thrust the ongoing debate of vaccinations back into the spotlight. Global supply chains could continue to suffer, and digital transformation will continue to accelerate at a rapid pace. The new normal could be here to stay longer than we anticipated eighteen months ago. 

Investors will be wondering if the markets can rally next week when they reopen after the holiday weekend. The time between November and December has long been known as a bullish period for the markets in general. But the latest variant may put a pause to the annual Santa Claus rally. We must remember that we saw this initial pullback following the Delta Variant announcement as well. Although some industries suffered, the broader markets more or less shrugged Delta off for the time being. 

The Omicron variant is allegedly more contagious and deadlier than previous variants. I am forecasting added volatility for the rest of 2021, including a further pullback in growth stocks as the US Federal Reserve introduces some of its tapering policies by the end of the year. It’s only been one day, but the sentiment for the markets has turned bearish, as the reality sets in that COVID-19 may just be around forever. Some companies to target include vaccine manufacturers and work from home stocks, while we could see some turbulence continue for travel stocks and companies that rely on global supply chains for manufacturing. Make no mistake, this next week could see a pop back because of just how much the markets fell on Black Friday. But I don’t expect an extended bull run of the likes we saw in 2020 heading into the new year. 

Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.