Stocks tumble on fears of Omicron surge, setback to Biden's spending plan

Dec. 20 (UPI) -- Stocks tumbled Monday as investors began the shortened trading week on fears over the surging Omicron COVID-19 variant and the setback to President Joe Biden's social spending bill.

The blue-chip Dow Jones Industrial Average closed down by about 433 points at the end of trading Monday afternoon, while the broader S&P 500 dropped 1.14%. The Nasdaq Composite sagged 1.24%.

Travel, entertainment and retail stocks, whose fortunes are directly tied to government-imposed COVID-19 restrictions, had some of the greatest losses earlier in the day but bounced back some by closing. United Airlines fell 3.7% on Monday afternoon but closed up 0.78% and Darden Restaurants, whose holdings include Olive Garden and Longhorn Steakhouse, ended the day down 1.27% after it lost as much as 3.5% earlier in the day.

The energy sector also took a significant hit as U.S. crude oil prices tumbled 3% to below $69 per barrel as investors worried that new restrictions might cut into energy demand.

Representatives of Zynga throw hats in the air at the opening bell on Monday at the New York Stock Exchange on Wall Street in New York City. Photo by John Angelillo/UPI

The sell-off came after the World Health Organization said Omicron cases are doubling every 1.5 to 3 days in countries where transmissions are documented. European leaders reacted by imposing new restrictions on Friday and over the weekend.

The Netherlands went into a hard lockdown on Sunday through at least Jan. 14 with schools and colleges, all non-essential shops and cultural institutions shuttered. Germany, meanwhile, is under a nationwide lockdown for the unvaccinated, including nonessential services, with all large events banned.

Analysts blamed some of Monday's market downturn on Sen. Joe Manchin's surprise announcement Sunday that he would not support President Joe Biden's $2 trillion Build Back Better social spending agenda.

Without the West Virginia Democrat's support, the measure, with its billion of dollars in economic stimulus spending, is unlikely to pass the Senate.

Leuthold Group chief investment strategist Jim Paulsen told CNBC that the stock troubles on Monday reflects "growing uncertainty surrounding whether the Omicron surge will bring new widespread economic shutdowns, an unexpected shelving of additional fiscal stimulus from President Biden's Build Back Better plan, and a breach by the S&P 500 index of its 50-day moving average."