Stocks Rebound Sharply After Omicron Selloff
4:05 pm Tuesday, December 21st, 2021
Wall Street’s main indexes jumped more than 1.5% on Tuesday, with strength in travel and economically sensitive shares as well as in Nike and Micron Technology following their earnings, as stocks rebounded from a coronavirus-fueled rout the session before.
There’s a belief that the market had gotten oversold on a short-term basis after the S&P 500 breached its 50-day moving average (4614) yesterday and was down as much as 4.3% from last Thursday’s intraday high. The benchmark index is back above the key technical level, which is being interpreted as a healthy indication.
Ten of the 11 S&P 500 sectors are trading higher with yesterday’s laggards claiming today’s top spots, including energy (+2.8%), financials (+2.3%), and industrials (+2.1%) with gains over 2.0%. The consumer staples sector (-0.04%) is underperforming with a fractional decline.
Nike (NKE) and Micron (MU) were providing catalysts for the retail and semiconductor stocks with some pleasing earnings news. The SPDR S&P Retail ETF (XRT) was up 2.8%. The Philadelphia Semiconductor Index is up 2.0%.
In addition, growth concerns have been tempered amid an indication that the U.S. isn’t heading towards COVID lockdowns and media reports suggesting that Senator Manchin (D-WV) could still agree to the Build Back Better Act. Granted, Mr. Manchin doesn’t appear close to any sort of agreement right now.
The Treasury yield curve is steepening, which typically happens when the market expects better economic growth and inflation, and WTI crude is up 3.9% to $71.29/bbl. The 2-yr yield is up four basis points to 0.67%, and the 10-yr yield is up seven basis points to 1.49%. The U.S. Dollar Index is up 0.1% to 96.61.
Vaccine-makers Pfizer (PFE) and Moderna (MRNA) were struggling today, in-line with the anti-COVID themes today. On a related note, Bloomberg reported that the FDA will likely approve both Merck’s (MRK 75.55, -0.86, -1.1%) and Pfizer’s pills to treat COVID-19 this week.
Today’s economic data was limited to the Current Account Balance for the third quarter, which totaled $214.8 billion (consensus -$204.8 billion). The second quarter deficit was upwardly revised to $198.3 billion from $190.3 billion.
