Market Snapshot: Dow, S&P 500 book best day in two weeks after Biden vows no return to March 2020-style lockdowns as omicron rages
U.S. stock indexes finished sharply higher Tuesday, ending a selloff in the past three sessions, as the Biden administration vowed to shun March 2020-style lockdowns and outlined plans to fight rising COVID-19 cases driven by the omicron variant.
Investors also were encouraged by news Monday that the Senate will vote on President Biden’s Build Back Better economic plan in January despite Democratic Sen. Joe Manchin’s opposition to it, suggesting further negotiations with the West Virginia lawmaker are likely.
How did stock indexes trade?
The Dow Jones Industrial Average DJIA, +1.60% rose 560.54 points, or 1.6%, to end at 35,492.70, its best daily percentage gain since Dec. 6, according to Dow Jones Market Data.
The S&P 500 SPX, +1.78% advanced 81.20 points, or 1.8%, finishing at 4,649.23.
The Nasdaq Composite COMP, +2.40% climbed 360.14 points, or 2.4%, closing at 15,341.09.
Best daily percentage gain for the S&P 500 and Nasdaq Composite since Dec. 7.
On Monday, the Dow fell 433.28 points, or 1.2%, while the S&P 500 shed 1.1% and the Nasdaq dropped 1.2%, marking a third straight day of losses for the major indexes.
What drove the market?
Buyers came out in force Tuesday, ending three straight days of losses for U.S. stocks as the Biden administration ramped up its fight against the omicron variant of the coronavirus.
“What we’re seeing today is a little bit of a buy-the-dip trend,” said Sahak Manuelian, head of equity trading at Wedbush Securities in Los Angeles, in a phone interview.
“This long term bullish uptrend is still very much in tact, but momentum is starting to wane in the near term,” he said, while pointing to trading conditions that “should get tougher and tougher going into next year.”
Despite the recent selloff, the S&P 500 still was up 23.8% in 2021 as of Tuesday’s close, the Dow was up 16% and the Nasdaq Composite advanced 19%, according to FactSet.
“I think, going forward, we aren’t going to have that magnitude of return,” Manuelian said.
Monday’s volatile action saw the S&P 500 index post its biggest three-day percentage slide since Sept. 30 and the Nasdaq’s worst such drop since May 12. But investors were back a day later, buying into recent weakness in the energy, financials and consumer discretionary sectors.
Investors were trying to gauge just how much the new omicron variant of coronavirus might slow economic growth, as more European nations announce new restrictions on gatherings and as central banks begin to rein in pandemic aid.
Biden said Tuesday the answer is “absolutely no” as to whether March 2020-style lockdowns will return to the U.S. as the omicron variant rages, while also outlining a plan to get more booster shots in arms, distribute 500 million free at-home COVID-19 testing kits and the immediate deployment of military doctors, nurses and other medical professionals to six hard-hit states and other measures.
“Almost everyone” in the U.S. who died by COVID 19 over the past few months has been unvaccinated, Biden said.
“Omicron is the single most important driver of markets at the moment, but just as omicron has surged dramatically, we expect it to exit as swiftly,” wrote Thomas Lee, managing partner at Fundstrat Global Advisors, in a note.
Also helping Tuesday’s mood was a Bloomberg report that Manchin and Biden spoke on Sunday evening, as a Washington source said that chat likely left the door open to further negotiations.
Biden said that “we are in trouble,” if his $2 trillion Build Back Better social-spending and climate bill fails to pass, during the COVID briefing Tuesday, noting that stocks fell after Goldman Sachs and other investment banks cut their U.S. growth forecasts after Manchin said he won’t back the bill.
Traders also have been checking out early for the holidays, leaving less liquidity and exaggerating some market moves, creating a hurdle for those trying to navigate a shortened week of trading. U.S. markets will close on Friday, Christmas Eve.
Sign up for our Market Watch Newsletters here.
Which companies were in focus?
Citrix Systems Inc. CTXS, +13.63% shares rose 13.6% Tuesday following a Bloomberg report that Elliot Investment Management and Vista Equity Partners were considering making a joint bid for the cloud-software company.
Nike Inc. NKE, +6.15% shares rose 6.2% after the athletic-wear maker’s better-than-expected earnings, despite poor China sales.
Micron Technology Inc. MU, +10.54% shares closed 10.5% higher after the chip maker delivered a solid forecast and earnings beat expectations.
Shares of Rite Aid Corp. RAD, +21.37% jumped 21.4% after the pharmacy retailer reported a surprise third-quarter adjusted profit and announced dozens of store closures.
General Mills Inc. GIS, -4.03% shares shed 4% after the food company reported fiscal second-quarter profit that missed expectations and its chief executive said supply-chain disruptions will drive another price shift higher in its products.
What did other markets do?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 1.460% rose 6.9 basis points to 1.487%. Yields and debt prices move opposite each other.
The ICE U.S. Dollar Index DXY, -0.09%, a measure of the currency against a basket of six major rivals, was about 0.1% higher.
Oil futures rose, with the U.S. benchmark CL00, +3.88% ending 3.7% higher at $71.12 a barrel, while gold futures GC00, -0.28% settled down 0.3% at $1,788.70 an ounce.
Bitcoin BTCUSD, -0.01% rose 3.5%.
The Stoxx Europe 600 index SXXP, +1.42% and London’s FTSE 100 UKX, +1.38% each closed 1.4% higher.
The Shanghai Composite SHCOMP, +0.88% rose 0.9%, while the Hang Seng Index HSI, +1.00% gained 1% and Japan’s Nikkei 225 NIK, +2.08% jumped 2.1%.
Barbara Kollmeyer contributed reporting