The S&P 500 .SPX and the Nasdaq closed below their 50-day moving average on Wednesday, while the Dow .DJI breached its 200-day moving average for the first time since July 2020 on growing investor angst about the latest coronavirus variant and the Federal Reserve's hawkish comments.
"It is a bit of a 'buy the dip' environment ... uncertainty will persist over the next week or so as scientists do more studies over the new variant," said Sam Stovall, chief investment strategist at CFRA Research in New York.
"I still think investors want to focus on equities, they just need to be given a reason to do so."
Wall Street whipsawed this week as investors appeared to scramble for bargains after every drawdown. However, the three indexes are tracking sharp weekly losses, with the Dow on pace for its fourth straight fall.
The United States and Germany joined countries around the globe planning stricter COVID-19 restrictions as the Omicron variant rattled markets, fearful it could choke a tentative economic recovery from the pandemic.
Market participants are already worried about supply chain logjams and global central banks returning faster to pre-pandemic monetary policies to tackle surging price pressures.
The CBOE volatility index, also known as Wall Street's fear gauge, was last trading at 29.60 points, a day after hitting its highest level since February.
At 08:42 a.m. ET, Dow e-minis were up 216 points, or 0.64%, S&P 500 e-minis were up 10.5 points, or 0.23%, and Nasdaq 100 e-minis were down 56.25 points, or 0.35%.
Meanwhile, lawmakers reached an agreement to fund the U.S. government until Feb. 18 as they scramble to avoid a partial government shutdown this weekend.
Stellar earnings reports and strong economic growth have powered U.S. stocks to a series of record highs in November, with the S&P 500 climbing 20.1% so far this year.
A Reuters poll of equity analysts said a correction was likely in the next six months, with the benchmark expected to gain 7.5% between now and end-2022 to finish at 4,910
Among other stocks, Delta Air Lines rose 1.8%, while cruise operators Carnival Corp and Norwegian Cruise Line gained about 2% each to recoup some of Wednesday's losses.
Oil majors Exxon Mobil and Chevron Corp rose 1.0% and 1.5%, respectively, tracking oil prices. Bank of America was the biggest gainer among its peers, up 1.1%.
(Reporting by Devik Jain and Anisha Sircar in Bengaluru; Editing by Maju Samuel) ((Devik.Jain@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 618
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