Stocks slump on worry over inflation, rates, virus

Stocks were on pace for their longest losing streak since September as prospects for higher rates and inflation unsettled global markets.

Stocks were on pace for their longest losing streak since September as prospects for higher rates and inflation unsettled global markets. Some corporate warnings about the negative impacts of the omicron coronavirus variant also soured sentiment.

The S&P 500 fell for a fifth straight day, with megacaps like Apple Inc. and Amazon.com Inc. slumping over 2 per cent. Some of the most-speculative pockets of the market bore the brunt of the selling. Cathie Wood’s flagship ARK Innovation exchange-traded fund sank as much as 5.1 per cent, bringing its five-day rout past 17 per cent. GameStop Corp. and AMC Entertainment Holdings Inc. drove so-called meme shares lower. Bitcoin was on track for its worst start to a year since the earliest days of the digital alternative to money. Treasury 10-year yields hovered near 1.8 per cent.

The fast-spreading omicron strain is adding to concern about corporate earnings. Lululemon Athletica Inc. tumbled after the maker of yoga pants warned that financial results will come at the low end of its previous guidance, saying the coronavirus variant was constraining its operations. Torrid Holdings Inc. plunged after the plus-size women’s clothing retailer cut its sales forecast as omicron caused disruptions to its workforce.

Markets are facing higher volatility as the pandemic liquidity that has pushed equities to record highs is withdrawn. The Federal Reserve will likely raise rates four times this year and will start its balance-sheet runoff process in July, if not earlier, according to Goldman Sachs Group Inc. A key measure of U.S. inflation -- set to be released Wednesday -- is anticipated to have increased further in December, putting additional pressure on the central bank to tighten policy.