Goldman Sachs criticized the panic wave that has hit financial and oil markets due to the COVID variant "Omicron." U.S. stock index showed significant declines on Friday, with the Dow Jones and S&P 500 experiencing their largest daily percentage losses in months, while sectors that had benefitted from economic reopenings fell sharply following news of the discovery of a new strain of the coronavirus that might be resistant to vaccines.
The Dow Jones Industrial Average dropped 905.04 points, or 2.53%, closing at 34,899.34 points. The S&P 500 fell 106.74 points, or 2.27%, to 4,594.72 points, while the Nasdaq Composite sank 353.57 points, or 2.23%, to 15,491.66 points. Oil prices lost nearly $10 last Friday.
Goldman Sachs stated that the decline in oil prices only makes sense if lockdowns are twice as severe as measures currently in place. The bank added, "We do not have enough information to predict a global wave, but the high spread rate of the variant will inevitably lead to its dominance. We will monitor the situation closely, but do not believe the new variant provides sufficient cause for significant portfolio changes."
The bank advised investors to consider short-term hedging for growth-sensitive assets. It pointed out that medical opinion in South Africa indicates that Omicron causes mild symptoms. Goldman Sachs concluded, "Medical opinion does not suggest that the new variant is more harmful, and current vaccines will remain effective."
