In an abrupt reversal, markets closed down on Thursday in the penultimate session of 2021 as a thinly-traded last week of the year for Wall Street comes to a close.

Investors mulled fresh jobs data out of Washington and rising cases of COVID-19 across the globe, which hit a record earlier this week in the latest wave of the virus, driven by the Omicron variant. Studies have shown that the strain, though more transmissible than previous ones, may cause milder disease and is less likely to lead to hospitalizations.

The developments on Omicron have helped markets largely shake off earlier concerns after a volatile December. Instead, inflation and potential moves by the Federal Reserve to mitigate surging prices, are expected to be front-and-center for investors heading into the new year.

“What’s not changed is the focus on inflation, that’s the biggest risk,” Brigg Macadam Founding Partner Greg Swenson told Yahoo Finance Live.

“I’m not worried about COVID at this point,” he said. “I think we’re past the worst phase of that, but we have inflation now.”

With inflationary pressures encouraging a more hawkish Federal Reserve, the composition of the policy-setting Federal Open Market Committee will play a key role in dictating the pace of interest rate hikes in 2022. The Biden administration is set to name its picks for three vacant seats on the central banks role Board of Governors next year.

Meanwhile, on the jobs front, the Labor Department released its latest report on initial and continuing jobless claims. First-time unemployment filings fell further from last week’s reading, coming in at 198,000 — below the expected 206,000. Earlier in December, jobless claims fell to 188,000 — its lowest level since 1969.

The claims, which fell by 8,000 from the previous week’s reading, mark the second lowest print during the pandemic and signal continued recovery in the labor market as high demand for workers pours into the new year.

While markets mostly powered on in Thursday’s session, travel stocks were impacted by virus-related developments.

JetBlue Airways Corp (JBLU) said it expects to cut 1,280 flights, scaling down its schedule due to a surge in personnel who have fallen sick. The company’s stock closed down -0.97% in early afternoon trading to $14.24 per share. Delta Air Lines (DAL) reported cancellations of an additional 250 flights on Wednesday after thousands of halted and delayed flights by major airlines during the Christmas weekend. Airline stocks have taken a hit all week amid growing flight disruptions caused by the latest virus wave and winter weather.

Delta ended Thursday's session -0.31% at $39.04 and American Airlines (AAL) closed up 0.11% to $18.07 per share. United Airlines (UAL) saw the session end 0.68% lower at $44.13.

“It’s a controlled meltdown, put it that way,” Boyd Group International president Mike Boyd told Yahoo Finance. Airlines “know where they’re going to be short pretty much ahead of time, and then they have to adjust for it.”

Cruise line operators also edged lower after the CDC advised people to avoid cruise travel, regardless of vaccination status, following an increase in onboard COVID-19 cases. Norwegian Cruise Line Holdings (NCLH) shed 2.46% to $21.05 per share. Carnival Corp. (CCL) declined 1.25% to close at $20.53 a piece, and Royal Caribbean Cruises (RCL) ended down 1.09% to $77.37.

In a regulatory filing on Thursday, Samsung BioLogics denied earlier reports that Samsung Group was in talks to acquire U.S. drugmaker Biogen Inc. (BIIB), which was in the spotlight on Wednesday after shares of the drugmaker surged during intraday trading following a report by the Korea Economic Daily, which cited investment banking sources. The report said Biogen approached Samsung to buy its shares in a deal that could be valued at more than $42 billion.

Biogen’s stock was down 7.09% to $240.00 per share at the end of trading.

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