Wall Street regains some ground with easing virus fears

Dec. 6 (Reuters) – Wall Street’s key averages closed higher Monday, with economically sensitive sectors and travel-related stocks rallying as investors were encouraged by some optimistic comments from a top US official about the latest COVID-19 variant.

Of Wall Street’s three major averages, the Dow rose the most, while industrials and services (.SPLRCI) and consumer discretionary (.SPlRCS), up about 1.6%, were the strongest sectors of the S&P, followed by energy (.SPNY) and utilities (.SPLRCU), up 1.5%. But declines in COVID-19 vaccine companies reduced profits in the healthcare sector (.SPXHC).

While the Omicron COVID-19 variant has caused alarm and some new restrictions around the world, investors seemed to be reassured by Dr. Anthony Fauci, the top infectious disease official in the US, told CNN that “so far it doesn’t look like there’s a great deal of seriousness.” He did say that more research is needed. read more

“People are less concerned 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 the Chinese central bank would reduce the amount of cash banks must keep in reserve, potentially boosting foreign companies selling products in China, as well as the Chinese economy. read more

The Dow Jones Industrial Average (.DJI) 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.

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

The economically sensitive Dow Jones Transportation Index (.DJT) outperformed the broader market with a gain of 2.3%, while the small-cap Russell 2000 (.RUT) climbed 2%.

Wall Street’s major indices have fluctuated wildly since Nov. 26 as investors broke the news of the COVID-19 Omicron variant and then the aggressive comments from Federal Reserve Chair Jerome Powell last week about a faster phasing out of government bond buys to ease rising inflation. to deal with, digested.

The S&P’s close on Monday was 2.3% lower than where it traded before investors began reacting to the Omicron virus.

“If the current strength in the blue chips can sustain itself somewhat, it could give the rest of the market the ability to gain confidence,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

Still, Goldman Sachs on Saturday lowered its outlook for US economic growth to 3.8% for 2022, citing risks and uncertainty surrounding Omicron’s rise. Investors had also braced themselves for a potential blow to corporate earnings, particularly at retailers, restaurants and travel companies. read more

The industrial sector’s top three win rates were airlines led by United Airlines with a gain of 8.3%, while the S&P Airline Index (.SPCOMAIR) closed at 5.5%.

Other strong gains in travel-related stocks were Norwegian Cruise Line Holdings (NCLH.N), which rose 9.5%. Vacation rental company Airbnb (ABNB.O) added 8.5%.

Big dropouts have included manufacturers of COVID-19 vaccines such as Moderna Inc, down 13.5%, and Pfizer (PFE.N), down 5%, as investors expected the development of vaccines with specific protections for Omicron could take months.

Nvidia (NVDA.O) closed 2% lower. Investors are concerned about the outcome of regulators’ oversight of the deal to buy British chip company ARM Ltd. read more

Shares of Kohl’s Corp. (KSS.N) closed 5.4% higher after hedge fund Engine Capital LP said it pressured the department store chain to consider selling the company or separating its e-commerce division to try to bounce back its share price. to improve. read more

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

“You have a lot of companies that have dual mandates right now. You’re trying to reduce risk associated with expiration, while at the same time rebalancing your portfolio toward 2022,” he said.

The number of emerging issues surpassed the number of declining issues on the NYSE by a ratio of 2.82 to 1; on Nasdaq, the 1.71-to-1 ratio was favorable for advanced traders.

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 have changed hands, compared to the average of 11.55 billion over the past 20 sessions.

Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Alden Bentley and Sinéad Carew in New York, adapted by Maju Samuel, Shounak Dasgupta and Cynthia Osterman

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