The Dow Jones Industrial Average rose more than 700 points on Monday, as equities continued to fluctuate dramatically throughout the day due to the unknown threat of the coronavirus’s Omicron form.
The Dow was last seen rising 734 points, or more than 2.1 percent, to 35,315 as investors shrugged off the new variation and shifted away from costly tech stocks and into those in tourism, entertainment, and other industries tied to global economic recovery.
Simultaneously, the S& P 500 was up 1.5 percent, while the Nasdaq was up 1.1 percent.
Some of the day’s biggest winners were travel equities, which had been hammered hard last week by the discovery of the Omicron variety and fears that it might announce a new wave of restrictions around the world.
By midday, Carnival Corp and Royal Caribbean were both up about 10%, while Norwegian Cruise Line was up more than 11%.
Delta Air Lines was up more than 8%, while American Airlines was up nearly 10%.
High-growth tech stocks had a difficult day as investors, maybe anticipating a faster-than-expected tapering of the Fed’s bond-buying program, continued to sell-off.
As investors shrugged off the new variation, the Dow was last seen trading more than 1.9 percent higher.
Tesla stock was down more than 3% by midday after Reuters reported that the Securities and Exchange Commission has begun an inquiry into the business in response to a whistleblower complaint from a former Tesla employee regarding a fire hazard associated with its solar panel systems.
Other high-growth options, such as Nvidia and Moderna, were also down. Stay-at-home options like Peloton and Zoom also declined after receiving a lift last week due to Omicron worries.
Despite additional concerns posed by the Omicron version, Federal Reserve Chairman Jerome Powell frightened tech investors last week when he cautioned that the central bank will still debate hastening the reduction of the bond-buying program at its December meeting.
The program is currently being phased out at a rate of $15 billion per month.
“At this time, the economy is extremely robust, and inflationary pressures are higher,” Powell said. “It is therefore fair in my opinion to contemplate winding up the taper of our asset purchases… possibly a few months sooner.” “I suppose we’ll talk about it at our next meeting.”
Powell’s statements, along with a trickle of information regarding whether the new COVID-19 variety is resistant to vaccinations, more contagious, or more lethal, contributed to the Dow finishing in the red last week, despite a very tumultuous week.
LPL Financial’s chief market analyst, Ryan Detrick, is bullish on the market as it approaches the end of the year, but he warns that the volatility seen last week is likely to persist.
“Although we expect the volatility to continue, it could be a good time to buy.” We’ve been dealing with COVID-19 for over 20 months. We’ve seen various permutations and managed to go forward, and we anticipate that a similar strategy will work again,” he said.
“Omicron has put a kink in the recent bull market, but stocks are still up more than 20% for the year, so it’s important to keep things in perspective.”
“We are not dismissing the Omicron concern, but we remain confident that the recovery is alive and strong, led by a very healthy consumer and corporate earnings backdrop.” But brace yourself, for large swings in daily news may be with us for a few more weeks. However, we anticipate that any lost output due to Omicron will simply be pushed out and regained by early next year.”
Add Comment