Stock prices were down around the world before Mr Powell’s testimony as investors struggled to understand the danger posed by the Omicron variant. The Stoxx Europe 600 closed 0.9% lower. In Asia, the Nikkei 225 in Japan and the Hang Seng in Hong Kong each fell more than 1.5%.

Investors have been watching closely for updates on the new variant since last week and remain particularly attentive to the effectiveness of vaccines against it.

The CEO of Moderna, a vaccine maker, said in an interview on Tuesday that there could be a “significant drop” in the effectiveness of current vaccines against the new variant. Executive Stéphane Bancel told the Financial Times that it could be months before a vaccine specific to Omicron could be produced on a large scale, and he added that it would be risky to move the set. of the company’s vaccine production while other variants are still prevalent.

Financial markets have been volatile since the identification of the Omicron variant in southern Africa late last week. The S&P 500 had its worst day since February on Friday, falling 2.3%. On Monday, he began to recover as politicians around the world warned of panic, even as some put travel bans in place.

Despite the fluctuations of the past few days, investors continue to sit on solid gains this year. The S&P 500 is up more than 22% in 2021 – and that’s one reason the selling could worsen next month, as investors try to preserve their gains for the year amid growing concerns about to what awaits them.

“You have uncertainty around Covid. There is uncertainty around inflation, uncertainty around global central bank policy, ”said Daniel Ivascyn, group investment director at PIMCO, a large Newport Beach-based fund manager. , in California. “Any of these things may not be enough to derail the rally, but all of these issues, combined with poor year-end liquidity, can certainly lead to big drops. “

Still, investors say the Omicron variant is unlikely to trigger the same kind of response from governments, businesses or individuals that the virus did when it first emerged. Even though Omicron is a bigger threat than the Delta variant before it, investors expect its effect on the market to be less severe than the nearly 34% drop in stock prices between February 2020 and the following month. .

“The worst-case scenario is no longer March 2020,” said Jeb Breece, director of Spears Abacus, an independent financial management firm in Manhattan. “Fear and strangers were such a big part of it. I don’t see us doing this again.

Coral Murphy Marcos contributed to this report.