Stocks Jump Sharply on Omicron Optimism
5:05 pm Tuesday, December 07th, 2021
The U.S. stock market rose sharply on Tuesday, as the S&P 500 and oil prices rose on hopes that Omicron would prove less damaging to the economy than feared.
The top-weighted technology sector (+3.6%) has held the lead since the start after underperforming yesterday. Just about every component trades in the green with chipmakers leading the way, sending the PHLX Semiconductor Index (+5.2%) to a fresh record.
ON Semiconductor (ON) and Marvell (MRVL) lead, jumping to fresh records, while Intel (INTC) has rallied past its 50-day moving average (51.35) to levels from late October after confirming plans to spin off its Mobileye unit, which is valued at about $50 bln.
Energy (+2.9%) is the only other sector with a gain of more than 2.5% as it follows an extension of the rebound in the price of crude. WTI crude is up $3.10, or 4.4%, at $72.59/bbl, returning to its high from last Monday after reclaiming its 200-day moving average (69.98).
In earnings news, AutoZone (AZO 1994.86, +114.87, +6.1%) has pushed to a fresh record after beating Q1 expectations, contributing to relative strength in the consumer discretionary sector (+2.5%), where only three components trade in negative territory.
Elsewhere, consumer staples (+0.4%) and utilities (+0.4%) underperform after showing relative strength yesterday. The two groups have gained about 2.0% apiece so far this week.
Treasuries hold modest losses with the 10-yr yield rising four basis points to 1.47%.
The October Trade Balance Report showed a narrowing in the deficit to $67.1 billion (consensus -$66.8 billion) from a downwardly revised $81.4 billion (from $80.9 billion) in September, with exports up $16.8 billion and imports up $2.5 billion from September levels.
The revised Q3 Productivity and Unit Labor Costs report showed productivity being revised down to -5.2% (consensus -4.9%) from the advance estimate of -5.0%. That is the largest decline in productivity since the second quarter of 1960. Unit labor costs were revised up to 9.6% (consensus 8.2%) from 8.3%.
