U.S. stock indexes rebounded Tuesday, after a sharp sell off in the past three sessions, with optimism aided by the Biden administration’s plan to fight rising COVID-19 cases driven by the omicron variant.
Investors also were encouraged by news Monday that the Senate will vote on President Biden’s Build Back Better economic plan in January despite Democratic Sen. Joe Manchin’s opposition to it, suggesting further negotiations with the West Virginia lawmaker are likely.
How are stock indexes trading?
- The Dow Jones Industrial Average DJIA, +0.82% rose 379.19 points, or 1.1%, to 35,311.35.
- The S&P 500 SPX, +0.43% was up 35.08 points, or 0.8%, at 4,603.10.
- The Nasdaq Composite COMP, +0.31% advanced 112.16 points, or 0.8%, to 15,093.10.
On Monday, the Dow fell 433.28 points, or 1.2%, while the S&P 500 shed 1.1% and the Nasdaq dropped 1.2%, marking a third straight day of losses for the major indexes.
What’s driving the market?
“We see stocks rebounding from an overreaction to the variant news and Biden’s new plan to distribute free Covid tests beginning in January,” said Peter Cardillo, chief market strategist at Spartan Capital, in a note to clients.
Monday’s volatile action saw the S&P 500 index post its biggest three-day percentage slide since Sept. 30 and the Nasdaq’s worst such drop since May 12.
Investors are trying to gauge just how much the new omicron variant of coronavirus will slow economic growth, just as central banks are reining in their pandemic aid.
“Omicron is the single most important driver of markets at the moment, but just as omicron has surged dramatically, we expect it to exit as swiftly,” wrote Thomas Lee, managing partner at Fundstrat Global Advisors, in a note.
“Thus, investors need to be mindful that we are in the midst of the darkest part of the omicron wave. Sure cases will rise further, but we expect stocks to bottom before cases peak,” he said.
The Biden administration is due to announce a omicron-fighting plan on Tuesday, with distribution of 500 million free at-home COVID-19 testing kits, the deployment of federal emergency assistance teams to six hard-hit states and other measures.
Also helping Tuesday’s mood was a Bloomberg report that Manchin and Biden spoke on Sunday evening, as a Washington source said that chat likely left the door open to further negotiations.
Traders are also checking out early for the holidays, leaving less liquidity and exaggerating some market moves, creating a hurdle for those trying to navigate a shortened week of trading. U.S. markets will close on Friday, Christmas Eve.
Which companies are in focus?
- Nike Inc. NKE, +5.18% shares rose 5.6% after the athletic-wear maker’s better-than-expected earnings, despite poor China sales.
- Micron Technology Inc. MU, +8.54% shares were up 8.3% after the chip maker delivered a solid forecast and earnings beat expectations.
- Shares of Rite Aid Corp. RAD, +17.82% jumped 17.7% after the pharmacy retailer reported a surprise third-quarter adjusted profit and announced dozens of store closures.
- General Mills Inc. GIS, -4.24% shares were down 4.3% after the food company reported fiscal second-quarter profit that missed expectations.
What are other markets doing?
- The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 1.471% rose 5.9 basis points to 1.476%. Yields and debt prices move opposite each other.
- The ICE U.S. Dollar Index DXY, +0.03%, a measure of the currency against a basket of six major rivals, was little changed.
- Oil futures rose, with the U.S. benchmark CL00, +2.46% up 2.5%, while gold futures GC00, -0.17% edged down 0.1%.
- Bitcoin BTCUSD, +3.09% rose 3.8%.
- The Stoxx Europe 600 index SXXP, +1.34% rose 1.4%, while London’s FTSE 100 UKX, +1.28% was up 1.3%.
- The Shanghai Composite SHCOMP, +0.88% rose 0.9%, while the Hang Seng Index HSI, +1.00% gained 1% and Japan’s Nikkei 225 NIK, +2.08% jumped 2.1%.
