US STOCKS-Wall Street closes up as easing in virus fears aids rebound

Wall Street's major averages closed higher on Monday with economically sensitive sectors and travel-related stocks soaring as investors were encouraged by some optimistic comments from a top U.S. official on the latest COVID-19 variant. Of Wall Street's three major averages, the Dow rose the most while energy and industrials were among the S&P's strongest sectors.


Reuters | Washington DC | Updated: 07-12-2021 15:45 IST | Created: 07-12-2021 02:32 IST
US STOCKS-Wall Street closes up as easing in virus fears aids rebound
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Wall Street's major averages closed higher on Monday with economically sensitive sectors and travel-related stocks soaring as investors were encouraged by some optimistic comments from a top U.S. official on the latest COVID-19 variant. Of Wall Street's three major averages, the Dow rose the most while energy and industrials were among the S&P's strongest sectors. But declines in COVID-19 vaccine companies diminished gains in the healthcare sector. While the Omicron COVID-19 variant has caused alarm and some new restrictions around the world, investors appeared to be reassured by Dr. Anthony Fauci, the top U.S. infectious disease official, who told CNN that "thus far it does not look like there's a great degree of severity to it." However, he did say that more study is needed.

"People are less worried 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 China's central bank would cut the amount of cash that banks must hold in reserve, potentially boosting overseas companies that sell products in China as well as China's economy.

According to preliminary data, the S&P 500 gained 52.37 points, or 1.15%, to end at 4,590.80 points, while the Nasdaq Composite gained 137.12 points, or 0.91%, to 15,222.59. The Dow Jones Industrial Average rose 642.29 points, or 1.87%, to 35,222.37. The S&P 500 Value Index outperformed its growth counterpart.

Wall Street's major indexes have been swinging wildly since Nov. 26 as investors digested news of the COVID-19 Omicron variant and then Federal Reserve Chair Jerome Powell's hawkish comments last week about a speedier tapering of government bond-buying to tackle surging inflation. "If today's strength in the blue-chips can sort of sustain itself, that might give the rest of the market the ability to start to feel confident," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

Still, Goldman Sachs on Saturday cut its outlook for U.S. economic growth to 3.8% for 2022, citing risks and uncertainty around the emergence of Omicron. Investors had also been bracing for a potential hit to corporate earnings, particularly among retailers, restaurants and travel companies. Strong gainers on the S&P 500 were travel related with Norwegian Cruise Line climbing along with Airbnb while the S&P Airline's index soared.

Big decliners included COVID-19 vaccine makers such as Moderna Inc and Pfizer as investors anticipated development of vaccines with protections specific to Omicron could take months. Nvidia was also falling. Investors have been worried about regulatory scrutiny of its deal to buy British chip firm ARM Ltd.

Kohl's Corp shares jumped after hedge fund Engine Capital LP said it was pushing the department-store chain to consider a sale of the company or separate its e-commerce division to improve its lagging stock price. JJ Kinahan, chief market strategist at TD Ameritrade, said investors may be preparing for a Dec. 17 expiration of options and futures.

"You have a lot of firms that have a double mandate right now. You are trying to take off risk, expiration related, while the same time rebalancing your portfolio heading into 2022," he said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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