Shares soar on Wall Street ahead of Christmas break

Shares largely closed higher on Wall Street on Wednesday, contributing to the market’s gains this week ahead of the Christmas break.

The Standard & Poor’s 500 index rose 1% after recovering from an early decline. The other indices also recovered after falling into the red in the beginning. The Dow Jones industrial average rose 1.1% and the Nasdaq composite closed 1.2% higher. The Russell 2000, a measure of small company shares, rose 0.9%.

Every major US index is still on track for weekly gains after a few turbulent days as stocks fluctuated between sharp losses and solid gains.

“We were strong yesterday and today, so markets are generally positive this week after some significant pressure from last week,” said Terry Sandven, chief equity strategist at US Bank Wealth Management.

The S&P 500 rose 47.33 points to 4,696.56. The index is now within 0.4% of its all-time high on December 10.

The Dow rose 261.19 points to 35,753.89, while the Nasdaq rose 180.81 points to 15,521.89. The Russell 2000 scored 18.96 points and closed at 2221.90.

The latest rise in coronavirus cases due to: the Omicron variant above the markets, associated with concerns about inflation and its effect on economic growth.

The Commerce Department said on Wednesday that: the US economy grew by 2.3% in the third quarter, slightly better than previously thought. But the prospects for a solid recovery in the future are clouded by the rapid spread of the latest strain of the coronavirus.

“The market is a little unsure about that (Omicron), but seems somewhat confident it won’t be another lockdown,” said Scott Wren, senior global market strategist at the Wells Fargo Investment Institute.

However, the uncertainty about the effect of the latter variant on the economy is likely to cause more volatility in the stock markets.

“Clearly, the pace of the economic recovery is being held hostage to Omicron, leading to heightened volatility,” Sandven said. “Volatility is probably the norm rather than the exception by our measure, and for good reason.”

Governments in Asia and Europe have tightened travel controls or rolled back plans to ease curbs already in place. In the US, President Biden announced on Tuesday that the government will provide rapid test kits and increase vaccination efforts, but gave no indication of plans for restrictions that could disrupt the economy.

Investors are also busy shifting money between sectors as the end of the year approaches and they are preparing for higher interest rates in 2022. The Federal Reserve has said it will expedite the process of closing its bond purchases that have contributed to maintain low interest rates, and open the door to central bank rate hikes in 2022.

Nearly 80% of companies in the S&P 500 rose Wednesday. Retailers and other businesses dependent on consumer spending were responsible for much of the profits. They rose after an encouraging consumer confidence report.

Tesla rose 7.5% for biggest gain in the S&P 500 after CEO Elon Musk reportedly said he had sold enough stock to meet his goal of selling 10% of his stake in the electric vehicle maker.

Technology and health stocks also helped lift the market. Microsoft was up 1.8% and Abbott Laboratories was up 2.8%.

Traders bid for shares in cruise lines, hotel operators and other travel-related stocks. Carnival was up 3.5%, Marriott was up 2.7% and Expedia Group was up 2.9%.

Energy futures rose, while US crude oil prices rose 2.3%.

Bond yields tended to be lower. The yield on the 10-year Treasury fell from 1.48% at the end of Tuesday to 1.46%.

Indices in Europe and Asia mainly closed higher.

The US stock exchanges will be closed on Friday in observance of Christmas.