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By Nicholas
Jasinski | Monday, December 6 Tape
Bombs. The Dow
Jones Industrial Average had its best day in over a year today, as
value and defensive stocks led a rebound from last week’s market declines.
The index surged 647 points, or 1.9%, for its best one-day point gain
since November 2020 and largest percentage increase since last March. The S&P
500 closed up 1.2% and the Nasdaq
Composite rose 0.9%, while the
small-cap Russell 2000 gained 2.1%, for its fourth-straight daily
move of 2% or more. The news
today was relatively positive for recent weeks, with early
signs that the Omicron variant of Covid-19 might be less severe
than earlier strains and reports that China is considering easing monetary
policy. That was the
today's main driver: Post-pandemic reopening stocks were among the biggest
gainers. Airlines American
Airlines Group added 7.9% and United
Airlines Holdings jumped 8.3%. Cruise lines Carnival and Royal
Caribbean Cruises surged 8.0% and
8.3%, respectively. Marriott International added
4.5%, Live Nation Entertainment rose 6.1%,
and Cinemark Holdings gained 7.7% But today's
rally was broad, as all 11 S&P 500 sectors closed in the green. The
Omicron variant continues to capture investors' attention. Bad news on that
front brought about the Dow's worst day of the year less than two weeks ago. The broad
market will remain sensitive to daily headlines about Omicron—both good and
bad. The so-called "tape bombs" will continue to drive trading
across markets until there's more certainty about the variant and its
ultimate economic impact. “It still
feels like we’re in the guesswork stage of working out what the impact of
Omicron will be,” said Russ Mould, an analyst
at broker AJ Bell. “It would
be naive to rule out further volatility as markets attempt to work out
exactly what’s going on.” On the Federal
Reserve policy front today, the
latest reporting suggested that the central bank could announce
plans at its next meeting to more quickly pull back from its bond-buying
program. That should result in higher bond yields and interest rates sooner,
which is less-than-positive news for stock prices. “We’re
really at a fascinating crossroads in markets at the moment,” said Jim
Reid, a strategist at Deutsche
Bank. “The market sentiment on the virus and the
policy makers at the Fed are moving in opposite directions.” Put
together, better virus news and higher interest rate expectations
favor economically-sensitive cyclical stocks over growth-oriented
technology stocks. That showed
up in today's trading, with the more cyclical Dow handily outperforming the
tech-heavy Nasdaq. |
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DJIA: +1.87% to 35,227.03 The Hot
Stock: Norwegian Cruise
Line Holdings +9.5% Best Sector:
Consumer Staples +1.8%
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