The new COVID-19 variant may cause a stir in the stock market
December has a history of high inventory performance dating back to 1950. This year, investors are predicting whether December will follow the same pattern as previous years.
It’s unclear how the Omicron, a new variant of Covid-19 spreading, will affect the financial market.
The S&P 500 has traditionally achieved 1.5 % on average in December, according to LPL Financial, making it the third-best month of the year after April and November. The majority of the gains in December usually happen in the second half of the month.
Investors are concerned that a new Covid variant will result in “new lockdowns, mobility restrictions, and lower economic growth,” according to Neil Wilson, the chief market analyst at Markets.com.
Fears about how the new COVID-19 variant will affect global growth, as well as the Fed’s hawkish shift in the face of rising inflation, derailed November’s gains, leaving the index with a 0.8 % loss for the month. The S&P 500 has gained 21.6 % this year and is still near record highs.
Those risks are unlikely to go away anytime soon, but if past performance is any indication, stocks have a good chance of finishing the year strongly.
According to Bespoke Investment Group data, the S&P 500 has made a profit in December 74 % of the time since 1928, more than any other month.
According to Ryan Detrick, LPL’s chief market strategist, they appear to be optimistic that stocks will avoid the new variant concerns for the time being, but investors should brace themselves because the final stage of 2021 could be a rocky road.
When the number of new COVID-19 cases increased in July and August as a result of the spread of the delta variant, the S&P 500 rose steadily for the most part. As a result, predicting how it will react to a new variant is impossible.
Also, Michael Sheldon, executive director, and chief investment officer of RDM Financial Group, stated that investors genuinely dislike risk. However, it could be a few days before they learn more about the new virus and what it may mean for the economy and markets.