Markets Aren’t That Spooked by Omicron

Re-pricing the pandemic

Scientists, doctors and public health officials are still assessing the danger posed by the Omicron variant of the coronavirus, but markets are already jumping to conclusions. On Friday, markets fell on fears that the fast-spreading strain of the coronavirus first detected in South Africa, and which has now been found in more than a dozen countries, could throw the global economic recovery into reverse. Many countries have banned travel from countries in Southern Africa, while Israel, Japan and Morocco closed their borders to all outside travelers.

But as more information emerged about the new “variant of concern,” the World Health Organization’s most serious category, markets began to rise. So far today European markets are up, and U.S. futures suggest that markets will also recover some — but not all — of Friday’s losses.

What do we know about Omicron? The variant has 50 mutations not seen in combination before. That has spurred fears that Omicron could render existing treatments less effective, but Moderna and Pfizer indicated yesterday that they could quickly tweak their vaccines. What’s more, some early signs suggest that while the variant could be more contagious than prior ones, it may not lead to more severe illness. “If this turns out to be true, this is bullish not bearish for markets,” the financier Bill Ackman tweeted yesterday.

Covid-related stock market drops are getting milder and shorter. Back in February 2020, the S&P 500 fell 3.4 percent in one day and then continued to slide for a month and a half. In October 2020, a resurgence of cases led to a one-day market drop of 3.5 percent, but markets rebounded within two weeks. Friday’s decline was 2.3 percent, with a rebound beginning the next trading day.

Bond and commodity investors are pricing in new scenarios. The yield on the 10-year Treasury bond is trading just above 1.5 percent, down from a recent high of nearly 1.7. A drop in bond yields tends to suggest lower inflation on the horizon, not higher, as has been the fear for months. That implies more subdued economic activity, which has also been reflected in plunging oil prices, with W.T.I. crude, the U.S. benchmark, bouncing up a bit today but trading more than 15 percent lower than a month ago.

In all, the recent market turmoil shows how dependent the economy is on the path of the pandemic, and how quickly sentiment can change with every twist and turn in our understanding of the virus.

Further reading:

HERE’S WHAT’S HAPPENING

Britain will reportedly demand that Meta undo a takeover. U.K. antitrust regulators will order Facebook’s parent company to unwind its $400 million acquisition of the online image platform Giphy, the Financial Times reports. Meanwhile, the E.U.’s antitrust chief, Margrethe Vestager, urged the bloc’s policymakers to bolster rules to regulate Big Tech.

Jared Kushner struggles in setting up his next act. The son-in-law of Donald Trump is using Middle East connections made during his White House tenure to raise money for a new investment fund, The Times reports. But a number of countries, like Qatar and the U.A.E., have declined to invest.

Ghislaine Maxwell’s trial begins today. The companion of the disgraced financier Jeffrey Epstein has been charged with several felonies, including sex trafficking of underage girls. Maxwell’s trial is seen by many as a proxy courtroom reckoning for Epstein, who died by suicide in 2019.

President Biden’s nomination for a top banking regulator looks doomed. Five centrist Democratic senators reportedly told the White House that they won’t support Saule Omarova as the head of the Office of the Comptroller of the Currency, according to Axios.

Tributes pour in for Stephen Sondheim. The songwriter, who helped reshape the American songbook with musicals like “West Side Story,” “Company” and “Sweeney Todd,” died on Friday at 91. Encomiums and appraisals quickly followed: “He was like Shakespeare,” said the actress Bernadette Peters.

Omicron: the questions for business

Although there is a lot we don’t know about the Omicron variant, business leaders are wearily asking themselves the same questions they did during previous surges of the coronavirus.

Will there be new lockdowns or vaccine mandates? Some jumped on the Omicrom variant as an opportunity to urge airlines to require proof of vaccination and testing for passengers. The variant could also put pressure on companies reluctant to impose vaccine mandates on employees. As for government measures, Dr. Anthony Fauci told ABC News it was “too early to say” whether there needed to be new lockdowns or mandates.

What does this mean for conferences and in-person gatherings? There’s a full lineup of events this winter, with organizers hoping to get back on track after previous cancellations and postponements. In early January, CES is scheduled to return to Las Vegas in-person, while the World Economic Forum in Davos is set to take place in person later that month. The Beijing Winter Olympics in February will allow spectators, though only from mainland China. South by Southwest in Austin, Texas, is set to return in-person in March. In Britain, new rules come into effect tomorrow that require all travelers to isolate on arrival until they receive a negative test result; similar policies elsewhere would make attending conferences and other gatherings more difficult, a potential setback for airlines that were just starting to see a rebound.

Are workers ever going back to the office? Beyond the immediate question about office holiday parties, there’s the bigger question about the fate of offices next year and beyond. Many companies have already set and delayed their return dates multiple times. Several, including Wells Fargo, Google and Facebook parent Meta, are planning to bring their workers back to the office in January. Will they postpone a return date again or simply order workers back? Is the prospect of a prolonged pandemic enough to persuade some companies to switch to a permanent form of flexibility or will they continue to muddle through with imperfect hybrid setups?

“Everything I do is for the 17-year-old version of myself.”

— Shannon Abloh, widow of the barrier-breaking fashion designer Virgil Abloh, quoting her husband, who died on Sunday at age 41 of cancer. He founded his own brand, Off-White, as well as taking on a wide-ranging role at LVMH, making him the most powerful Black executive in the most powerful luxury group in the world.

The week ahead

► Labor market snapshot: On Friday, the Labor Department will release its report on jobs in November. The most recent report showed that the economy added more than 500,000 jobs in October after months of disappointing job figures. Still, 4.2 million fewer Americans were working in October than before pandemic lockdowns.

► Theranos trial: Elizabeth Holmes, the founder of the blood testing start-up, will continue to testify as she defends herself against fraud charges. In three days of testimony last week, she painted herself as someone whose best intentions were misinterpreted.

► Cyber Monday and Giving Tuesday: Americans returned to in-person shopping with gusto on Black Friday. But as Wirecutter notes, many shopping deals will extend through today, known as Cyber Monday. And for those who are more inclined to spend on charitable causes, there’s Giving Tuesday.

Exclusive: More boards are following the money

Directors at public companies are paying closer attention than ever to political spending, according to a new report shared exclusively with DealBook. Each year, the Center for Political Accountability and the Wharton School’s Zicklin Center for Business Ethics ranks S&P 500 companies by the disclosure and accountability policies that govern their political spending. This year, the average S&P 500 company’s score on political disclosure and accountability rose to 54 percent, up from 50 percent last year.

Companies are “lifting the veil” on their political spending, the report said, responding to a greater awareness of corporate America’s political influence. This past proxy season, shareholder resolutions seeking greater disclosure on spending passed at a higher rate than ever. And companies were called out for channeling money to lawmakers and organizations that challenged the 2020 presidential election result.

Boards are more aware of the consequences of political spending. Greater oversight at the director level shows that S&P 500 companies recognize the importance of these decisions:

• General board oversight of political spending is now in place at 295 companies, up around 14 percent from 2020.

• Board committee review of direct political spending is the policy at 255 companies, up more than 12 percent.

• Board committee review of payments to trade associations and other tax-exempt groups rose to 228, up almost 15 percent.

Aligning rhetoric and spending is the next step. To top the index, companies must have a process to avoid supporting causes that undermine their stated principles. Only one — Intel — “has distinguished itself by making public a policy to explicitly steer clear of conflict or misalignment between its core values and its political donations,” according to the report. Intel stopped donating to members of Congress who voted against certifying the 2020 presidential election, and now reviews lawmakers’ public statements, in addition to their voting records, for alignment with its corporate values.

Cash is flowing freely into the 2022 elections, testing these policies. House members have raised $128 million, more than double the sum at this point in the cycle two years ago. Bruce Freed, president of the Center for Political Accountability, told DealBook that demanding greater transparency of how and why these donations are approved is the best way to sharpen the focus on the consequences on corporate political spending.

THE SPEED READ

Deals

• Satya Nadella, Microsoft’s C.E.O., sold nearly half of his holdings in the company last week. (Regulatory filing)

• Private equity firms have struck nearly $1 trillion worth of leveraged buyouts so far this year, a record. (WSJ)

• Half of this year’s big I.P.O.s have sunk below their debut prices. (FT)

• Short sellers have bounced back from their shellacking during the meme-stock boom. (Insider)

Policy

• Lina Khan’s battle to rein in Big Tech. (New Yorker)

• European countries are looking to expand nuclear energy programs to help reach ambitious climate goals. (NYT)

• Democratic lawmakers plan to advance a $250 billion bill aimed at bolstering America’s competitiveness against China, but Beijing is threatening retribution if it passes. (Politico)

• The actor Matthew McConaughey said he’s not running for governor of Texas “at this moment.” (NYT)

• Top buyout firms like Blackstone and Apollo haven’t signed onto a financial industry pledge to cut carbon emissions. (Bloomberg)

Best of the rest

• Many millennials are dealing with high inflation for the first time. (NYT)

• The rise of a furniture hub in North Carolina illustrates how supply-chain woes are reshaping local economies. (NYT)

• Uber security executives wrongly accused of breaking the law continue to face blowback, even as the company has moved on. (NYT)

• On “Succession” and what it says about the difficulty of passing a wealth tax. (Politico)

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.