US stock market opens lower before Fed chair's testimony

By Ovunc Kutlu

ANKARA (AA) - US markets opened lower Tuesday amid the new coronavirus variant causing worries and before the Federal Reserve Chair Jerome Powell's testimony.

The blue-chip Dow dove 375 points, or 1.07%, to 34,761, while the S&P 500 fell 35 points, or 0.75%, to 4,620.

The tech-heavy Nasdaq fell 41 points, or 0.26%, to 15,745.

The steep decline came amid worries that the new variant. known as B.1.1.529 in South Africa, could again prompt quarantine measures, close businesses and halt the economic recovery around the world.

Fed Chair Jerome Powell will later testify before the Senate Banking Committee where he is expected to say that the omicron variant poses a downside risk to the economy and complicates the inflation picture.

It remains a question whether the Fed would increase asset purchases and postpone raising interest rates because of the variant.

Due to heightened risks, the VIX volatility index, known as the fear index, jumped 8% to 24.79.

The dollar index was down 0.8% to 95.57, while the yield on 10-year US Treasury notes fell 6.4% to 1.431%.

With the potential risk of lower global oil demand due to the new variant, oil prices were down more than 3%. The price of Brent crude fell 3.35% to $70.77 and the US benchmark West Texas Intermediate crude lost 3.3% to $67.64.

Precious metals showed gains with investors viewing them as safer bets. Gold rose 1% to $1,802 an ounce and silver increased 1.2% to $23.19.