Dow falls 652 points on Fed chief Powell's tapering comments and Omicron variant concerns

• US stocks tumbled Tuesday after tapering comments from Fed Chair Jerome Powell stoked rate-hike fears.
• Investors' nerves were already rattled after Moderna's CEO expressed reservations about the efficacy of the company's vaccine against the new strain.
• The 10-year Treasury note yield slid to 1.444% from Monday's 1.529%.

US stocks tumbled Tuesday following new comments from Federal Reserve Chair Jerome Powell who signaled an earlier-than-expected end to monthly bond purchases. In a turnaround, he also remarked that inflation can no longer be considered "transitory."

Further shaking investor confidence were comments from the central bank chief that warned investors against the Omicron strain, which he said threatens to slow down the country's economic recovery and increase "uncertainty for inflation."

Powell's remarks deepened the selloff in equities that started at the open after Moderna's CEO expressed reservations about the efficacy of his company's vaccine against the new strain.

The benchmark S&P 500 tumbled in lockstep with the Dow Jones Industrial Average. The tech-heavy Nasdaq Composite edged lower, after closing more than 2% higher the previous day.

Here's where US indexes stood after the 4:00 p.m. ET close on Tuesday:

• S&P 500: 4,566.98, 1.90%
• Dow Jones Industrial Average: 34,483.33, 1.86% (652.61 points)
• Nasdaq Composite: 15,537.69, 1.55%

Investors are trying to assess the threat and gravity of Omicron especially as major global economies seem to be on the cusp of a recovery. The strain was deemed a "variant of concern" by the World Health Organization, in part because preliminary evidence suggests it may increase the risk of reinfection with COVID-19.

It did not help that Moderna boss Stephane Bancel told the Financial Times Tuesday "there is no world" in which vaccine effectiveness is the same against Omicron as against the Delta variant. He added that it will likely take months for vaccine-makers to develop and distribute large numbers of effective shots.

"Today will go down as the day Fed Chair Powell shed his dovish wings and showed signs of becoming a hawk," Edward Moya, senior market analyst at Oanda, said. "Powell's comments about finishing tapering a few months sooner helped the dollar pare earlier Omicron-driven losses and sent stocks back to their earlier lows."

Still, JPMorgan strategists on Tuesday were bullish the S&P 500 will not be hampered by the emergence of the Omicron variant despite the recent stock market pullback. They see a 9% gain for the benchmark index to 5,050 by the end of next year.

Concerned investors pushed into US government bonds as they looked for shelter from the headlines. The 10-year Treasury note yield slid to 1.444% from Monday's 1.529%. Bond yields move inversely to prices.

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Oil prices slipped, erasing all of the previous day's gains. West Texas Intermediate crude oil slipped 4.96% to $66.60 per barrel. Brent crude, oil's international benchmark, fell 3.91% to $70.57 per barrel.

The Organization of the Petroleum Exporting Countries, due to meet Thursday, is expected to decide on further supply increases.

Gold fell 0.75% to $1,773.64 per ounce.