Stocks Advance As Investors Assess Omicron Risk; Bitcoin stabilizes
Shares rose on Monday as investors weighed more over the potential impacts of the Omicron variant after volatile trading last week. Bitcoin prices edged down after a massive selloff over the weekend.
All three major indices were higher in intraday trading, led by the Dow Jones with a jump of more than 600 points, or 1.8%, shortly after noon in New York. Small cap stocks also outperformed, and the Russell 2000 added over 1%. Tesla (TSLA) shares turned positive in afternoon trading after falling into bear market territory earlier, following a Reuters report that the Securities and Exchange Commission opened a investigation of the company’s SolarCity solar panel system.
Some encouraging developments regarding the latest variant of the coronavirus have helped increase risk assets. Dr Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), told CNN’s “State of the Union” on Sunday that reports from South Africa have reached now suggested that the Omicron variant might not cause more serious infections than those caused by earlier variants.
“So far, although it is too early to really make any definitive statements on this, so far it doesn’t seem like there is a great degree of severity, but we really have to be careful before. to determine that it’s less severe or doesn’t really cause any serious illness comparable to Delta, “Fauci said.” But so far the signals have been encouraging with regard to severity. ”
Meanwhile, however, Moderna (MRNA) chairman Stephen Hoge told ABC on Sunday that there was a “real risk that we would see a decrease in the effectiveness of the vaccines” currently available as the Omicron variant spreads. The vaccine maker also said last week it may have a COVID-19 booster designed to treat the Omicron variant available as early as March.
Bitcoin (BTC-USD) prices stabilized and only declined slightly on Monday morning after plunging over the weekend. The largest cryptocurrency by market cap fell 21% on Saturday, according to Bloomberg data, to just over $ 42,000. While no obvious catalyst was behind the decline, some experts attributed a combination of nervousness about the Omicron variant and anticipation of a faster reduction in asset purchases by the Federal Reserve to the volatility of the cryptocurrency. Prices hovered above $ 48,000 intraday on Monday.
The Fed’s next monetary policy moves, in the face of the twin worries of rising inflation and now the Omicron variant, have become a central focus for investors. Fed Chairman Jerome Powell said last week that it might be appropriate to “wrap up [its] purchases with a few months in advance â, which in turn led to believe that at least one interest rate hike could occur soon after the end of this program. Investors were initially worried about the specter of monetary policy tightening at a time when But with inflation rising at the fastest pace in at least three decades according to several major metrics, the Fed is now focusing on containing of rising prices, according to a number of economists.
“For the Fed, the decision to cut faster is complicated – driven more by inflation than by economic dynamics and the labor market. A new wave of infections could certainly slow down the recovery, but it could also have an impact on prices, âRubeela Farooqi, chief economist for High Frequency Economics, wrote in a note. “If the variant results in renewed and widespread restrictions – as is already the case in some countries – then supply chain disruptions are likely to intensify, putting even more upward pressure on the parameters of price.”
2:24 p.m. ET: Microsoft takes Yahoo Finance Company of the Year title
Tech juggernaut Microsoft (MSFT) was named Company of the Year 2021 by Yahoo Finance, as the company extends a solid streak of performance in its business and inventory amid growing adoption by businesses and consumers of its offerings. hardware and software.
Microsoft shares have jumped 45% in the past year, topping the S&P 500 and its peers including (AAPL) and Amazon (AMZN). This surge sent its market capitalization above $ 2 trillion. And at least one analyst estimates the stock could reach $ 3 trillion in the next six months.
âWhat we’re seeing in the cloud, Microsoft is leading the way. I think that’s what we’ve seen with the action – it’s a reassessment because investors have a better understanding of how this growth story plays out. Our take is that this is a company with a market cap of $ 3 trillion, âsaid Dan Ives, analyst at Wedbush.
12:19 p.m. ET: Stocks extend gains, S&P 500, Dow add more than 1%
The S&P 500 and Dow traded sharply higher in afternoon trading, while the Nasdaq joined the other two indices in the green.
Utilities, financials and industrials outperformed the S&P 500 as investors bought cyclical stocks that were beaten last week amid new worries about the virus. Health, information technology and communications services underperformed. In the 30-stock Dow Jones, the Walgreen Boots Alliance, Boeing and American Express were the best performers.
Crude oil prices also rallied, and West Texas mid-size crude oil futures gained more than 3% to return above $ 68 a barrel. The CBOE volatility index, or VIX, fell back to nearly 29 after hitting as high as 35.3 on Friday for its highest level since January.
10:23 am ET: yield curve signals market expectations for a return to “low growth, low inflation environment”: strategist
While the Omicron variant served as the latest catalyst for the decline in US stock markets, some strategists have suggested that the market is already ready for such a move.
âThe markets are really assessing the potential slowdown in economic growth,â Alessio de Longis, senior portfolio manager of Invesco Investment Solutions, Yahoo Finance Live told Yahoo Monday. “There has been a lot of attention to the Omicron virus as one of the catalysts for this mainstream view that we are late for a slowdown. But to be honest I think it was already in the cards.”
âThe markets will really focus on Omicron as well as central bank price action and rhetoric,â he added. “The most relevant indicator in my mind is the shape of the yield curve, it’s the behavior of the long end. The long end of the yield curve has steadily increased, the yield curve has flattened in the face. hawkish rhetoric, in the face of higher interest rate expectations in the short term. This indicates that the market expects growth to return to the environment of low growth and low inflation that characterized GFC . ”
9:34 am ET: Stocks mostly open higher, shaking up volatility from last week
Here’s where the markets were trading on Monday morning:
S&P 500 (^ GSPC): +23.24 (+ 0.51%) to 4,561.67
Dow (^ DJI): +336.57 (+ 0.97%) to 34,916.65
Nasdaq (^ IXIC): -32.32 (-0.21%) to 15,046.07
Raw (CL = F): + $ 1.55 (+ 2.34%) to $ 67.81 per barrel
Gold (CG = F): – $ 3.80 (-0.21%) to $ 1,780.10 per ounce
10-year cash flow (^ TNX): +3.6 bps for a yield of 1.377%
9:09 am ET: SEC launches probe into Tesla’s solar panel system: Reuters
The United States Securities and Exchange Commission is investigating Tesla (TSLA) following a whistleblower complaint that the electric vehicle maker failed to adequately disclose fire risks associated with engine defects. its solar panel system to consumers and investors, Reuters reported, citing a letter from the agency. . Tesla shares lost more than 1% at the start of the session.
Tesla acquired solar panel system maker SolarCity in 2016. The complaint argued that Tesla failed to properly notify buyers that faulty electrical connectors on panel systems could cause fires, according to Reuters.
7:45 a.m. ET Monday: S&P 500, Dow futures rise
Here are the main moves in the markets ahead of Monday’s opening bell:
S&P 500 Futures Contracts (ES = F): +9.75 points (+ 0.21%), at 4,547.25
Dow Futures (YM = F): +202 points (+ 0.58%), at 34,768.00
Nasdaq Futures (NQ = F): -80 points (-0.51%) to 15,637.75
Raw (CL = F): + $ 2.15 (+ 3.24%) to $ 68.41 per barrel
Gold (CG = F): – $ 4.60 (-0.26%) to $ 1,779.30 per ounce
10-year cash flow (^ TNX): + 4.9 bps for a yield of 1.39%
Emily McCormick is a reporter for Yahoo Finance. Follow her on twitter