Stocks are higher on Tuesday, with the S&P 500 rebounding from its worst three-day decline since Sept. 30.
Shortly after the open, the Dow Jones Industrial Average rose 300 points, or 0.9%, while the S&P 500 was up 0.7% and the Nasdaq Composite gained 0.7%.
The U.K. has decided against new lockdowns—for now—in light of the spread of the Omicron Covid-19 variant. That may boost investor confidence a bit, as other countries have already imposed lockdowns.
But overall, the stock market has already experienced a pullback and some are now buying the dip. The S&P 500—flat since early November—had fallen as much as 4% from an all-time high to its low point in that stretch. Several economically-sensitive sectors, like oil and banking were in correction territory as recent as Monday, down more than 10% from recent peaks.
Not only has Omicron sparked fears about global economic activity, but central banks are tightening monetary policy by rapidly reducing the amount in bonds they are buying each month and looking at lifting short-term interest rates.
The market isn’t out of the woods. All three major U.S. indexes are trading below their all-time highs—and the Fed hasn’t even implemented its fist interest rate hike yet.
The S&P 500’s decline from recent all-time highs, the last two of which were at the 4,712 and 4,704 index levels, shows that investors are selling stocks at around those levels. Instinet’s chief market technician, Frank Cappelleri, noted that the index has seen a “double top” pattern. Ideally, a bullish investor would like to see that the index can rise above that top in order to maintain confidence in the market’s upward direction.
“(Monday’s) price action in equities should remind investors of how bumpy the road can become as easy street looks to be in the rearview mirror,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. Investors should be “preparing for turbulent roads ahead,” Ripley said.
Broadly speaking, market participants were moving into riskier assets and out of safer ones.
Asian markets posted solid gains on Tuesday, with the Nikkei 225 rising more than 2% following a slump Monday. European stock indexes were more than 1% higher.
Oil prices were starting to rebound, with WTI crude oil up 3% Tuesday, after it fell more than 3% Monday.
The price of Treasury bonds fell, with the 10-year yield on U.S. government bonds up to 1.47% from a 1.43% closing level Monday. That’s the yield’s highest level since Dec. 10.
As for Covid-19, the Centers for Disease Control and Prevention said Monday that the Omicron variant accounted for roughly 73% of infections for the week ended Dec. 18, overtaking the Delta variant. Moderna (ticker: MRNA) released some positive data, saying a 50 microgram booster dose of its Covid-19 vaccine increased neutralizing antibody levels against the Omicron variant by about 37-fold.
Here are five stocks on the move Tuesday:
Micron Technology (MU) rose 9.3% after the memory-chip company posted strong earnings and provided better-than-expected forecasts for the current quarter.
Nike (NKE) shares rose 5.7% after the sneaker maker posted fiscal second-quarter earnings and sales that topped analysts’ expectations despite persistent supply-chain challenges.
Nikola (NKLA) stock initially rose, then fell 0.5% after agreeing to settle civil fraud charges brought by the Securities and Exchange Commission. Without admitting the charges announced Tuesday, Nikola will pay a $125 million fine to compensate defrauded investors.
General Mills (GIS) stock fell 3.7% after the company reported a profit of 99 cents a share, missing estimates of $1.05 a share, on sales of $5 billion, above expectations for $4.8 billion.
United Rentals (URI) stock fell 0.2% after getting downgraded to Neutral from Outperform at Baird.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Joe Woelfel at joseph.woelfel@barrons.com
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December 21, 2021 at 10:04PM
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Stock Market Today: S&P 500 Is Rebounding as Omicron Lockdown News Eases - Barron's
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