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Wall Street regains some ground with help from easing virus fears

EconomyDec 06, 2021 07:35PM ET
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© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 29, 2021. REUTERS/Brendan McDermid

By Devik Jain, Shreyashi Sanyal and Alden Bentley

(Reuters) - 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 U.S. official on the latest COVID-19 variant.

Of Wall Street's three major averages, the Dow rose the most while industrials and consumer staples, up around 1.6%, were the S&P's strongest sectors followed by energy and utilities, up 1.5%. 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 Dr. Anthony Fauci, the top U.S. 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.

The Dow Jones Industrial Average rose 646.95 points, or 1.87%, to 35,227.03, the S&P 500 gained 53.24 points, or 1.17%, to 4,591.67 and the Nasdaq Composite added 139.68 points, or 0.93%, to 15,225.15.

  The S&P 500 Value Index rose 1.5%, outperforming its growth counterpart, which gained 0.9%.

The economically sensitive Dow Jones Transportation index outperformed the broader market with a 2.3% gain while the small-cap Russell 2000 climbed 2%.

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 (NYSE:GS) on Saturday cut its outlook for U.S. 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 (NYSE:NCLH) Holdings, which finished up 9.5%. Vacation rental company Airbnb added 8.5%.

Big decliners included COVID-19 vaccine makers such as Moderna (NASDAQ:MRNA) Inc, down 13.5%, and Pfizer (NYSE:PFE), down 5%, as investors anticipated development of vaccines with protections specific to Omicron could take months.

Nvidia (NASDAQ:NVDA) closed down 2%. Investors have been worried about the outcome of regulatory scrutiny of its deal to buy British chip firm ARM Ltd.

Kohl's Corp (NYSE:KSS) shares closed up 5.4% after hedge fund Engine Capital LP said it was pushing the department-store chain to consider a sale of the company or separate its e-commerce division to improve its lagging stock price.

JJ Kinahan, chief market strategist at TD Ameritrade, said investors may be preparing for a Dec. 17 expiration of options and futures.

"You have a lot of firms that have a double mandate right now. You are trying to take off risk, expiration related, while the same time rebalancing your portfolio heading into 2022," he said.

Advancing issues outnumbered declining ones on the NYSE by a 2.82-to-1 ratio; on Nasdaq, a 1.71-to-1 ratio favored 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 U.S. exchanges, 11.96 billion shares changed hands compared with the 11.55 billion average for the last 20 sessions.

Wall Street regains some ground with help from easing virus fears
 

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Comments (11)
Mesgana Negusse
Mesgana Negusse Dec 07, 2021 3:27AM ET
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Merry Christmas Rally.Every one
perplexed76 .
perplexed76 . Dec 07, 2021 1:05AM ET
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omicron rally begins
Fong SH
Fong SH Dec 06, 2021 10:35PM ET
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Don't be too happy and celebrate early it's always calm before the storm the steep correction is buidling up it will be bloodshed when it comes,, hitting you without warnings be careful
Tauhid Kazemi
Tauhid Kazemi Dec 06, 2021 6:44PM ET
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up yours
Al Gore
Al Gore Dec 06, 2021 1:41PM ET
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long live america
Jared Magnums
Jared Magnums Dec 06, 2021 1:29PM ET
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Is this where all the Zerohedge conspiracy whack jobs come to meet??
Dave Jones
Dave Jones Dec 06, 2021 12:26PM ET
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there's only one real investor....
Paul Richard
Paul Richard Dec 06, 2021 12:26PM ET
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Well done Mr. President. let us try to get 4800 SP500 before year end.
Stan Smith
Stan Smith Dec 06, 2021 11:51AM ET
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Fed Booster juice...
palmer long
palmer long Dec 06, 2021 8:13AM ET
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Fed in buying again before mkt. opens.Banksters making all the money trading.Look out below. No fresh candi, mkt. Will fall 20% more. Guaranteedoh, I forgot about the Fed.
Imran Imran
Imran Imran Dec 06, 2021 7:49AM ET
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