Pandemic fears reignite! The Dow fell more than 300 points, and Tesla fell into a bear market

* The Dow and S&P recorded the largest one-day decline in two weeks, and the aviation and cruise sectors suffered a sell-off;

* Pfizer rose more than 4% and the company plans to buy Arena pharmaceuticals for $6.7 billion;

*Global ETF inflows reached a new high.

U.S. stocks fell across the board on Monday, with fears over the Olmikron strain looming over the market, while investors remained cautious on the eve of the Fed's interest rate meeting.

As of the close, the Dow was down 320.04 points, or 0.89 percent, at 35,650.95 points, the Nasdaq Composite was down 1.39 percent at 15,413.28 points, and the S&P 500 was down 0.91 percent at 4,668.97 points. The fear index VIX rose 8.7 percent at 20.31.

Market overview

The epidemic situation is still grim, British Prime Minister Johnson said on the 13th that the first case of death due to infection with the Aumechjong strain in the United Kingdom. Johnson also said that the best way to fight the virus at present is to strengthen the needle. The Omiljung virus, which now accounts for around 40% of COVID-19 cases in London, will soon "overwhelm" the entire capital. He announced that the UK government will speed up the intensive vaccination programme to provide a third dose of booster vaccination to all adults by the end of the year.

The U.S. Centers for Disease Control and Prevention (CDC) on Monday advised Americans not to travel to Italy, Greenland and Mauritius, and the CDC has now upgraded travel warnings to "very dangerous level four" in 84 countries and territories, including almost all of Europe.

Price concerns remain stubborn, with the New York Fed releasing a November consumer expectations survey on Monday in which respondents saw inflation uncertainty rise and 1-year inflation expectations rising further to a record peak of 6 percent. Previous data from the U.S. Department of Labor showed that the U.S. Consumer Price Index (CPI) rose 6.8 percent year-on-year in November, the highest since 1982.

A poll released by Ipsos local time on the 12th showed that nearly 70% of Americans expressed disapproval of US President Joe Biden's way of dealing with inflation. The survey found that 69 percent of Americans disapprove of Biden's handling of inflation, with only 28 percent agreeing. In addition, in terms of economic recovery, 57% said they did not approve of Biden's performance.

Mohamed El-Erian, Allianz's chief economic adviser, said the Fed needed to act quickly to redefine its rhetoric about inflation. "The Fed characterizes inflation as temporary, which is probably the worst inflation forecast in the Fed's history. "Therefore, starting this week, the Fed must quickly regain control of the rhetoric and regain credibility." Otherwise, it will be the driving force behind higher inflation expectations. Elian believes that inflation in the United States has not yet reached the peak peak, and the rate of consumer price increases will remain close to current levels in the coming months.

The Fed will hold its last rate meeting this week, and several officials, including Fed Chairman Jerome Powell, recently said they could end their $120 billion monthly bond purchase program by June 2022. Goldman Sachs expects the Federal Open Market Committee (FOMC) to potentially double the rate at which it scales back its taper to $30 billion a month and complete the current round of asset purchases in March.

Ipek Ozkardeskaya, senior analyst at Swissquote, said: "The expectation for this week's Fed meeting is that a faster reduction in quantitative easing will be announced, perhaps suggesting that the first US interest rate hike may come sooner than previously expected." We may see some categories of stocks fall out of favor, such as Meme stocks, which have benefited greatly from cheap liquidity and may not rise as wildly as they have in the past in the coming months. ”

Jim Paulsen, chief investment strategist at Leuthold Group, believes that with fed tightening looming, investors are selling off any asset other than safe-haven assets, including defensive sectors, large-cap stocks, bonds and safe-haven dollars. Before the End of the Fed meeting, investors may be concerned that the stock market will continue to be under pressure.

Economic restart concept sectors such as aviation and cruise ships suffered a sell-off. United fell 5.2 percent, American Airlines 4.9 percent and Delta Air Lines 3.4 percent. In addition, Carnival Cruises fell about 4.9 percent, and Royal Caribbean and Norwegian Cruises fell more than 3 percent.

Moderna rose 5.8 percent after White House chief medical adviser Fauci called the COVID-19 vaccine booster "optimal care" and said the definition of "full vaccination" would not change.

Pfizer rose 4.6 percent on Monday to announce on Monday that it would buy innovative drug development company Arena Pharmaceuticals, which has multiple products under research in the immune inflammation space, for nearly $6.7 billion. Israel's Health Ministry's Central Virus Laboratory said on Saturday that a three-shot course of the Pfizer vaccine was effective against the Omiljung strain.

Tesla fell 5.0 percent, its market capitalization fell below $1 trillion, and entered a bear market for the third time in the year. The National Highway Traffic Safety Administration (NHTSA) confirmed last week that Tesla was being questioned about recent software updates allowing drivers to play games while driving.

Electric upstart Rivian rose 3.7 percent as the company announced plans to build a new factory in Georgia to build cars and batteries.

Tech stocks performed poorly, with Apple opening high and falling 2.1 percent, the biggest one-day drop in nearly three weeks. JPMorgan believes the market is underestimating the contribution of 5G iPhone SE devices to demand, raising Apple's price target from $180 to $210. Amazon fell 1.5 percent, Google fell 1.3 percent, Microsoft fell 0.9 percent, and Facebook bucked the trend by 1.4 percent.

In terms of Chinese stocks, iQiyi fell 4.9%, Pinduoduo fell 3.2%, and Alibaba, Baidu and JD.com fell more than 2%. The new car-making forces fell back, With Weilai Automobile falling 1.7%, Ideal falling 3.4%, and Xiaopeng falling 3.2%.

International oil prices are under pressure, investors are concerned about the potential impact of the epidemic on energy demand, and news of the resumption of negotiations on the Iranian nuclear agreement has also affected market sentiment. The WTI crude oil near-month contract fell 0.5 percent at $71.29 a barrel, and the Brent crude near-month contract fell 1.0 percent at $74.39 a barrel.

International gold prices narrowed, with the COMEX gold futures contract for February delivery on the New York Mercantile Exchange up 0.2% at $1786.30 an ounce.

Global ETF inflows reached a new high

According to the latest data from Morningstar, global inflows into ETFs exceeded the $1 trillion mark at the end of November, well above $735.7 billion for the whole of last year. Global ETF assets, supported by accommodative central banks' liquidity, pushed up to nearly $9.5 trillion, more than double the size at the end of 2018.

The analysis pointed out that the S&P 500 index rose 25% during the year, while the lack of high-yield alternative funds in the market has boosted investor interest in ETFs. Most of that money went into tracking Vanguard, BlackRock and State Street's index funds, which control more than three-quarters of total U.S. ETF assets.

With still relatively small sizes and higher rates than passive funds, many active ETFs face more intense competition and liquidation pressures. According to FactSet, three-fifths of the nearly 600 active ETFs in the U.S. have assets of less than $100 million, and more than half are under $50 million. Elisabeth Kashner, head of ETF research at FactSet, said: "A lot of companies are seriously thinking about their future today. ”