US stock futures were higher in overnight trading on Tuesday after a sell-off on Wall Street amid fears over Omicron's new Covid variant and the US Federal Reserve contemplated tapering faster than planned.
Dow futures rose 90 points. S&P 500 futures gained 0.5% and Nasdaq 100 futures rose 0.65%.
The large averages have seen several volatile sessions, starting last Friday when the Dow Jones Industrial Average had its worst day since October 2020. Stocks rebounded on Monday, only to fall again on Tuesday.
Wednesday is the first trading day of the last month of 2021.
The Dow lost more than 650 points on Tuesday. The S&P 500 lost 1.9% and the technology-driven Nasdaq Composite lost 1.6%. The small cap benchmark Russell 2000 lost 1.9% as cyclical stocks weighed on the markets.
Stocks hit their lows when Federal Reserve Chairman Jerome Powell said the central bank would discuss accelerating bond buying at its December meeting. Despite the potential hiatus from omicron, the Fed chief said he believed a slowdown in the pace of monthly bond purchases could come faster than the $ 15 billion-per-month schedule announced earlier this month.
"At this point the economy is very strong and inflationary pressures are higher, so I think it is appropriate to consider expanding our bond purchases … maybe a few months earlier," said Powell. "I assume that we will discuss this at our upcoming meeting."
The accelerated lifting of the Fed's loose policy shows investors that the central bank is focused on fighting inflation rather than new threats from the pandemic.
"Markets appear to be struggling to digest the combination of increased uncertainty about the impact of the Omicron option and a restrictive Fed pivot in the context of persistently high inflation," said Gregory Daco, chief US economist at Oxford Economics.
Bond yields also fell Tuesday, with 10-year US Treasuries falling 8 basis points to below 1.45% on mounting Omikron fears.
The new variant of Covid, which was first discovered in South Africa, has now been identified in more than a dozen countries, causing many to restrict travel. On Tuesday, the CEO of Moderna told the Financial Times that he expected existing vaccines against the new variant to be less effective.
The shares closed a volatile month of trading on Tuesday. The Dow lost 3.7% for its second of three months of losses. The S&P 500 fell 0.8% while the Nasdaq Composite rose 0.25% in November. The Russell 2000 lost 4.3% in November, the worst month since March 2020.
Still, the key averages for the year rose solidly. The Dow is up 12.7% and the S&P 500 is up 21.6% in 2021. The Nasdaq Composite is up an impressive 20.6% this year.
On Wednesday, investors will evaluate updates on the omicron variant as well as some important economic reports. November Manufacturing PMI, ISM Manufacturing Pressure, and October Construction Spending will be released on Wednesday morning.
ADP's private payroll data is released at 8:15 a.m. Economists polled by Dow Jones expected 506,000 private jobs to be created in November, up from 571,000 in October.