Trade on Wednesday could not have been worse for bulls. The S&P 500 (SPX) started the session with a gain of 1.9% as year-end institutional cash flooded the early tape, says Jon Markman, growth-stock specialist and editor of Strategic Advantage.

However, the rally fell apart in the middle of the session after Fed Chairman Jerome Powell reiterated his view that the central bank's tapering process could end sooner than the previously announced June deadline. 

To make matters worse, the Center for Disease Control confirmed the first American case of the omicron variant of Covid-19. In the end, the benchmark S&P 500 skidded 1.2% to close at 4,513, well below the critical 4,530 support level. 

In what seems like the blink of an eye, everything is falling apart for bulls. The next important support level is 4,880. Resistance is now 4,530, then 4,630. 

Spectacular short-covering rallies are common during downdrafts, yet bulls will need a few closes north of 4,630 to reverse this ugly new trend. 

The Dow fell 1.3% to 34,022 and the Nasdaq finished 1.8% lower. Communication services and consumer discretionary were the biggest decliners among the sectors, with utilities the sole sector in the green.

Concerns that the new Covid-19 variant will slow down the global economic recovery were heightened after the US confirmed that the first case of the omicron variant was identified in San Francisco. White House Chief Medical Advisor Dr. Anthony Fauci said the individual, who was fully vaccinated, recently returned from South Africa to San Francisco on Nov. 22 and tested positive on Monday earlier this week, according to a White House press briefing.

BioNTech Chief Executive Ugur Sahin reportedly said current vaccines will provide a decent defense against the new, potentially more infectious variant, even if they aren't as effective. This is in contrast with Moderna (MRNA) CEO Stephane Bancel's prior comments that current vaccines will likely be less effective against omicron.

Breadth favored decliners 6-1, with 73 new highs vs 824 new lows. Big caps on the new high list included Apple (AAPL), NextEra Energy (NEE), Prologis (PLD), Lam Research (LRCX), and KLA Corporation (KLAC). Tech, utilities, and real estate, an odd mélange.

The 10-year US Treasury (TNX) yield fell three basis points to 1.40%. West Texas Intermediate crude oil (WTI) dropped 1.7% to $65.06 a barrel. US crude oil stocks fell by 900,000 barrels following a one million barrel gain in the previous week, versus a 1.5 million-barrel drop expected.

OPEC delayed discussion on the global oil demand outlook until ministers meet with their non-OPEC allies Thursday, according to a news report. OPEC is set to expand monthly production by 400,000 barrels a day until April. The US disclosed in November plans to release 50 million barrels from its Strategic Petroleum Reserve.

In other economic news, the Institute for Supply Management's US manufacturing index rose to 61.1 in November from 60.8 in October, compared with expectations for an increase to 61.2 in a survey compiled by Bloomberg. There were stronger readings for new orders, production, and employment.

ADP said US private payrolls rose by 534,000 in November after a 570,000 gain in October, above the expected increase of 525,000 ahead of Friday's employment report from the Bureau of Labor Statistics. ADP said it is too soon to assess the effect of the omicron variant of Covid-19 on the pace of job creation.

The Mortgage Bankers Association said mortgage applications fell 7.2% in the week ended Nov. 26 after a 1.8% increase in the previous week, as a further rise in mortgage rates pushed refinancing activity lower. New purchase applications rose to provide some offset, but increasing borrowing costs continued to price out first-time buyers.

In company news, Moderna was down 11.9%. The drug maker's chief executive sold 10,000 shares of the company for $3.2 million. A regulatory filing with the Securities and Exchange Commission showed Bancel has control over about 16.2 million shares of Moderna.

Learn more about Jon Markman here…