Why Wall Street Isn’t Freaking Out Over Omicron

The Omicron variation has arrived at an inopportune moment for investors just as they prepare for the new year. However, Wall Street appears to consider the new Covid-19 virus type as little more than a bit of nuisance. We'll go back to wearing masks at offices and malls while continuing to work on the economic recovery.

In the weeks since Omicron's Thanksgiving appearance, RBC Capital Markets' U.S. equities strategist Lori Calvasina and her colleagues have met with many investors to discuss RBC's 2022 estimates. Omicron hasn't been a hot issue at that meeting.

Calvasina tells journalists, "It hasn't been the topic of conversation. To be honest, the Fed has gotten a lot more attention."

Only around half of RBC's clients were concerned that the new variation would impact the economy or their portfolios, according to a study conducted two weeks ago. Their main worry was whether vaccinations against Omicron were still effective. "It'll take a few weeks for us to find that out," Calvasina adds. "However, based on the amount of our data so far, our knowledge is skewed toward the good."

According to vaccine manufacturers, the highly altered Omicron is more contagious than previous Covid strains, even among the vaccinated. However, immunizations still provide significant protection against severe symptoms that might lead to hospitalization or death. Treatments for the Covid virus, such as Pfizer's (PFE) experimental antiviral tablet, also appear to be effective against Omicron.

According to data analytic research done in October by RBC analyst Mike Tran, the Covid strains will continue to appear. Still, in general, financial markets and society have grown less reacting to Covid case numbers. "The vaccination has obviously lessened the degree of elasticity between social behavior and new Covid cases," Tran said, "but Covid weariness has also helped."

The RBC research looked at media coverage of Covid, as well as public, corporate reports, and conference calls. Compared to 2020, Covid mentions were roughly 40% less ordinary this year.

RBC analyst Tran examined data from sources such as Booking Holdings (BKNG) restaurant-reservation service OpenTable and Raytheon Technologies (RTX) air-traffic monitor FlightAware to find that the Delta variation had not prevented Americans from discretionary trips throughout the summer.

Omicron probably won't change that behavior. "Chances are you continued to go to the mall or eat at a restaurant throughout the summer, despite a significant spike in cases if you were comfortable doing the same things in the spring," writes Tran.