WALL Street’s major averages closed higher on Monday with economically sensitive sectors and travel-related stocks advancing solidly as investors were encouraged by some optimistic comments from a top US official on the latest COVID-19 variant.
The Dow Jones Industrial Average rose 646.95 points or 1.87% to 35,227.03, the S&P 500 (.SPX) gained 53.24 points or 1.17% to 4,591.67 and the Nasdaq Composite (.IXIC) added 139.68 points or 0.93% to 15,225.15.
But declines in COVID-19 vaccine companies diminished gains in the healthcare sector.
While the Omicron COVID-19 variant has caused alarm and some new restrictions around the world, investors appeared to be reassured by D. Anthony Fauci, the top US infectious disease official, who told CNN that “thus far it does not look like there’s a great degree of severity to it.” However, he did say that more study is needed.
“People are less worried about the variant,” said King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco.
Lip also cited a boost from news that China’s central bank would cut the amount of cash that banks must hold in reserve, potentially boosting overseas companies that sell products in China as well as China’s economy.
Wall Street’s major indexes have been swinging wildly since Nov 26 as investors digested news of the COVID-19 Omicron variant and then Federal Reserve Chair Jerome Powell’s hawkish comments last week about a speedier tapering of government bond-buying to tackle surging inflation.
The S&P’s finish on Monday was 2.3% below where it traded before investors started reacting to the Omicron virus.
“If today’s strength in the blue chips can sort of sustain itself, that might give the rest of the market the ability to start to feel confident,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.
Still, Goldman Sachs on Saturday cut its outlook for US economic growth to 3.8% for 2022, citing risks and uncertainty around the emergence of Omicron. Investors had also been bracing for a potential hit to corporate earnings, particularly among retailers, restaurants and travel companies.
The industrials sector’s three biggest percentage gainers were airlines led by United Airlines 8.3% gain while the S&P Airline’s index closed up 5.5%.
Other strong gainers in travel related stocks included Norwegian Cruise Line Holdings which finished up 9.5%. Vacation rental company Airbnb added 8.5%.
Big decliners included COVID-19 vaccine makers such as Moderna Inc, down 13.5%, and Pfizer (PFE.N), down 5%, as investors anticipated development of vaccines with protections specific to Omicron could take months.
Advancing issues outnumbered declining ones on the NYSE by a 2.82-to-1 ratio; on Nasdaq, a 1.71-to-1 ratio favoured advancers.
The S&P 500 posted 20 new 52-week highs and one new low; the Nasdaq Composite recorded 28 new highs and 600 new lows.
On US exchanges, 11.96 billion shares changed hands compared with the 11.55 billion average for the last 20 sessions. – Dec 7, 2021
