Stocks Jump on First Trading Day of 2022
5:03 pm Monday, January 03rd, 2022
U.S. stocks closed the first day of the new year with gains, though investors were monitoring cases of the Omicron variant of Covid-19 and other factors that could weigh on stocks this year.
Growth concerns aren’t driving the action, though, as some of today’s leaders are cyclical stocks, oil prices ($76.38, +1.16, +1.5%) are trading higher, and the Treasury yield curve is steepening to the upside. There could be new-year rebalancing efforts in the mix, particularly in the small-caps, which underperformed last year.
From a sector perspective, the S&P 500 energy (+2.5%), consumer discretionary (+2.0%), and financials (+1.1%) sectors are up more than 1.0% while the real estate (-1.6%), health care (-1.6%), utilities (-1.6%), materials (-1.3%), and industrials (-1.2%) sectors are down more than 1.0%.
Tesla (TSLA) is driving the outperformance of the consumer discretionary sector, and Nasdaq, after reporting record Q4 deliveries. TSLA shares are currently up 10.5%.
Specifying the moves in the Treasury market, the 2-yr yield is up five basis points to 0.77%, and the 10-yr yield is up 11 basis points to 1.62%. The sharp rise in the 10-yr yield hasn’t upset the larger growth stocks, but smaller, unprofitable growth stocks are struggling today.
In other developments, the FDA approved Pfizer’s (PFE) COVID-19 booster vaccine for kids 12-15, as expected, AT&T (T) refused a government request to delay its 5G rollout, and Wells Fargo (WFC) was upgraded to Overweight from Equal Weight at Barclays.
Total construction spending increased 0.4% month-over-month in November (consensus +0.6%) following an upwardly revised 0.4% increase (from 0.2%) in October. Total private construction increased 0.6% month-over-month while total public construction spending decreased 0.2%. On a year-over-year basis, total construction spending was up 9.3%.
The preliminary December IHS Markit Manufacturing PMI decreased to 57.7 from a revised final reading of 58.3 (from 57.8) in November.
