Stocks tumbled on Tuesday as investors weighed the potential economic fallout from the new coronavirus variant.
The Dow Jones Industrial Average was down more than 600 points in the afternoon.
In testimony before the Senate Banking Committee, Federal Reserve chair Jerome Powell warned that growing concern over the coronavirus, including the new omicron variant, could make people wary about returning to in-person jobs. That could slow the recovery of the labor market and prolong the supply-chain bottlenecks that have contributed to the highest inflation in more than three decades.
Powell said elevated inflation is likely to continue well into next year.
Fed policymakers are set to meet in about two weeks. Powell said by then, they may have more information about the possible health effects of the omicron variant and how it responds to existing vaccines.
With rising price pressures, the central bank has begun to dial back its aggressive bond-buying program, which was put in place in the early part of the pandemic to support the financial markets. But Powell suggested that the process could be accelerated, so bond purchases would end a few months earlier than next summer.
Ending the bond purchases early would give the Fed more flexibility to raise interest rates, if necessary, to keep inflation from spiraling out of control.
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Stock selloff worsens on omicron impact worries, Powell comments - NPR
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