S&P 500 sets record as virus fears ebb

POSITIVE NOTE:
AstraZeneca and Novavax said their vaccines protected against Omicron, offering some reassurance to investors looking to allocate capital

Wall Street’s major indices posted solid gains for a third consecutive session on Thursday, with the S&P 500 closing in on a record high as encouraging developments ease investor concerns about the economic impact of the Omicron variant of SARS-CoV-2.

Stocks ended the week that was shortened by the holidays on a positive note. Earnings were broad in the S&P 500 sectors, led by consumer discretionary and industrials and services, both of which were up about 1.2 percent.

Vaccine makers AstraZeneca PLC and Novavax Inc said their shots protected against Omicron, as UK data suggested it could cause proportionally fewer hospital cases than the Delta variant, although public health experts said the fight against COVID-19 was far from over.

Photo: Reuters

The arrival of Omicron has pushed up market volatility for much of this month, which has been a strong year for equities.

“There was a lot of negative sentiment in the latter part of the year, and investors have probably continued to see some pretty strong economic growth and some pretty positive developments, regarding healthcare innovation around COVID, and that puts a bit of a stock bid and makes investors looking for capital allocation towards the end of the year,” said John Hancock Investment Management, cochief investment strategist Matthew Miskin.

The Dow Jones Industrial Average rose 196.67 points, or 0.55 percent, to 35,950.56, the S&P 500 gained 29.23 points, or 0.62 percent, to 4,725.79, and the NASDAQ Composite added 131.48 points, or 0.62 percent. 85 percent to 15,653.37.

Defensive sectors, which have largely outperformed this month, generally lagged on Thursday. The real estate sector fell 0.4 percent.

The S&P 500 is up for three days, after falling in the three previous sessions.

“People see the strength on Tuesday and Wednesday, and suddenly everyone is more optimistic again,” said Robert Pavlik, senior portfolio manager, Dakota Wealth Management.

Since last Friday, the S&P 500 rose 2.28 percent, the Dow gained 1.65 percent and the NASDAQ climbed 3.19 percent.

Trading volumes were expected to be smaller than usual in the run-up to the Christmas and New Year holidays. The stock market was closed on Friday for the Christmas holidays.

In another medical development, the US approved Merck & Co’s antiviral pill for COVID-19 for certain high-risk adult patients, a day after giving them a broader green light for a similar but more effective treatment from Pfizer Inc. Merck shares fell 0.6 percent, while Pfizer fell 1.4 percent.

The number of Americans filing new jobless claims last week remained below COVID-19 levels as the labor market tightened while consumer spending rose sharply, putting the economy on track for a strong year-end.

The S&P 500 is up about 26 percent so far this year. Still, the environment for equities could change heading into next year, as the US Federal Reserve is expected to start raising interest rates next year.

Emerging issues outperformed the declining ones on the NYSE by a ratio of 2.40 to 1; on the NASDAQ, a ratio of 2.22 to 1 favored the advanced.

The S&P 500 recorded 35 new highs in 52 weeks and no new lows, while the NASDAQ Composite recorded 62 new highs and 80 new lows.

About 8 billion shares have changed hands on US exchanges, compared to the daily average of 11.8 billion over the past 20 sessions.