Stocks Retraced Sharply From Omicron Sell Off While Dow Increases With More Than 600 points.


Author: Maria Andretti

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A sharp retrace was observed on Thursday after the news of omicron led to sell-offs in the previous session. Cyclical names recovered from their recent losses. 

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Leading the pack is the Dow Jones Industrial Average that gained 617.75 points to 34,639.7. It was helped by a 7.5% uptick in Boeing’s stock. The S&P 500 saw an increase of 1.4% to 45,577.10. The technology-related Nasdaq Composite traded on eToro rose by 0.8% to 15,381. 32. Russel 2000, filled mostly with economically sensitive names, gained 2.7%.

Market Trend 

The lead gainers on Thursday were airline, casino, and energy stocks. They rebounded from Wednesday’s market rout. Delta Air Lines increased by 9.3%, MGM Resorts rose by almost 7.7%, and Hilton Worldwide increased by 7.4%. Wynn Resorts increased by almost 8.2%, while Norwegian Cruise Line gained 7.7%. On the other hand, Baker Hughes and Occidental Petroleum gained 2.5% and 2.4%, respectively. 

An increase of 7.5% was seen in Dow component Boeing’s share after China gave a clearing order of flight to 737 Max. 

After the first case of the new omicron virus-Covid-19 variant was confirmed on Friday in the US, investors continue to wait for new development. 

The Biden-led administration has reacted to the latest development about the new variant by asking businesses to proceed with vaccination regulations, despite the mandate of the administration being halted in courts pending review. Also, the white house has tightened travel rules by asking inbound passengers to ensure they are tested 24 hours before onboarding. 

On Thursday, a second case of the omicron virus was reported by the Minnesota Public Health Authorities. It was a case of a resident who had just returned from New York City. The Minnesota resident was reported to have recovered from Omicron, while the California resident reported mild symptoms. 

Despite recording lots of positives, Apple stocks were on the negative side after Bloomberg News reported that the tech firm is experiencing a reduction in the demand for iPhone ahead of the holiday season. 

What Are Analysts Saying?

Here’s what Jim Paulsen, chief investment strategist for Leuthold Group, said about the recent rally in stocks traded on TD Ameritrade.

“While it is nice to see a rally, I am not sure investors should put much meaning into it. ”

“Fear and greed will dominate activity as investor worries oscillate between concerns the worst is not yet over and anxieties of missing out on any recovery.”

Also, analysts are saying there’s a possibility of the Federal Reserve severing its asset purchasing program faster than expected. 

On Tuesday, the Fed Chair, Jerome Powell, told the senate that the “economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at the November meeting, perhaps a few months sooner.”

Savita Subramanian, Bank of America Securities head of U.S. equity & quantitative strategy, said, “We remain cautious on S&P 500 amid a hawkish Fed tightening into an overvalued market.”

Subramanian added that the Bank of America has noted that December has historically been important for the S&P 500, with it gaining an average of 2.3% since 1936 and having 79% positive of the time. He later said that, however, December has not always been immune to sell-offs. 

Ed Moya, the senior market analyst at Oanda, also has this to say about the behavior of the market to the omicron news. 

“We’ve seen this movie before, and Wall Street will likely remain COVID-variant headline-driven until a clear assessment over this wave can be made.”

“The next couple of weeks will likely see risk appetite take a cue from incremental Omicron updates, supply chain issues, and every inflation reading.”

The gain observed on Thursday continues its streak as the stock market digests what the new variant means. The Dow has reduced by 0.7% for the week, while S&P 500 and Nasdaq Composite have seen a reduction of about 0.4% and 0.7%, respectively. 

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Maria Andretti is an Administrative Assistant with eight years of experience working alongside the VP finance of a Fortune 500 company.