U.S. stocks rose on Wednesday, rallying for a second day as the market continued to rebound from a three-day losing streak spurred by fears about the omicron Covid variant.
The Dow Jones Industrial Average gained 201 points. The S&P 500 climbed 0.7% and the Nasdaq Composite edged up 0.8% Trading is expected to be thin for the remainder of the week ahead of the holidays.
Caterpillar rose 1.5% after Bernstein upgraded the stock, saying the machinery maker will be a key beneficiary of a rebound in global growth.
Tesla shares jumped more than 7% after Elon Musk said in a podcast that he had reached his goal of selling 10% of his shares for tax reasons.
December, normally the calmest month for markets, has so far been the most volatile month of 2021, according to Bespoke Investment Group that looked at the S&P 500’s average absolute daily change since 1953.
Wall Street’s “fear gauge” the Cboe Volatility Index spiked above 35 earlier this month and has stayed above the 20 threshold.
Investors have been grappling with fears of the fast-spreading omicron Covid variant, surging inflation and the end of ultra-easy monetary policy. Many are expecting lower returns and a bumpier road ahead after a strong year that saw the S&P 500 gain nearly 24%.
“The news flow is negative in the near-term as the Omicron wave causes economic and corporate earnings dislocations, but investors are increasingly bullish looking out beyond the next few weeks,” Adam Crisafulli, founder of Vital Knowledge, said in a note.
All three of the major averages jumped on Tuesday in a relief rally following days of weakness on omicron fears. The Dow added 560 points, or 1.6%. The S&P 500 rose 1.8% and the Nasdaq Composite gained 2.4%. The S&P 500 snapped a three-day losing streak that saw the benchmark lose more than 3%, its worst loss during similar time periods since September. The Nasdaq tumbled nearly 4% in the three days through Monday, its worst such stretch since May.
The Food and Drug Administration on Wednesday granted emergency use authorization for Pfizer’s Covid pill, the first antiviral drug against the virus for at-home use. Pfizer shares gained about 2%.
President Joe Biden in a press conference Tuesday urged Americans to get their booster shots, saying those who have are “highly protected.” He also reiterated that the U.S. will not bring back the strict lockdowns that were imposed at the start of the pandemic.
With the delta variant, “the economy was able to sustain better than most expected,” said Keith Buchanan, portfolio manager at Globalt Investments. “A lot of people will say that the economy held up because there was more monetary stimulus. Coming into Omicron, that’s not necessarily the case as much as it was in Delta and this is another test of a different flavor. It’s testing if the economy and the market can hold up given the much less accommodative fiscal and monetary policy.”
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