U.S. stocks powered higher Thursday, as investors looked to reverse the biggest two-day declines on Wall Street in more than a year, amid lingering concerns over the confirmation of the Omicron variant in the world’s largest economy.
A fully-vaccinated traveler — albeit without a third booster shot — returning to the United States from South Africa, where the variant was first identified, was confirmed infected by the Omicron variant, health officials said late Wednesday, sending the Dow into a 900 point reversal in the final hours of a volatile trading session.
Markets appear to have stabilized in early pre-market trading, although Apple’s (AAPL) – Get Apple Inc. Report pre-market decline is holding down tech and the CME Group’s benchmark volatility index, the VIX, is trading at six month highs as questions remain regarding the potential prevalence of the variant, its resistance to current vaccines and the severity of symptoms associated with infection.
Federal Reserve Chairman Jerome Powell’s hawkish comments on rates and inflation, as well as what appears to be a pledge to complete the central bank’s bond purchase tapering in the first half of next year, is adding to investor caution heading into the Thursday session.
As a result, 2-year Treasury note yields holding north of 60 basis points and the CME Group’s FedWatch tool is now pricing in a 79.4% chance of a July rate hike, up from 77% earlier this week.
“Omicron is not a market event, but it triggers weak hands to shoot first and act rational later. The economy will not be shut down over Covid and the Fed is going to maintain an accommodative bias. Investors with the proper asset allocation have earned the ability to ignore these expected market spurts and tantrums,” said David Bahnsen, chief investment officer, The Bahnsen Group.
On Wall Street, the Dow Jones Industrial Average was marked 450 points higher in late morning trading, while the S&P 500 gained 22 points.
The tech-focused Nasdaq Composite bumped only a few points into positive territory as benchmark 10-year Treasury note yields hold at 1.444%, in early New York trading and Apple shares held down gains.
Apple, in fact, was marked 2.4% lower following reports that the world’s biggest tech company has cautioned suppliers over waning iPhone demand heading into the peak of the holiday shopping season.
On the flip side, Boeing (BA) – Get Boeing Company Report shares jumped 3.8% after authorities in China cleared the path for a return to service of the troubled 737 MAX in the world’s biggest aircraft market.
Uber Technologies (UBER) – Get Uber Technologies, Inc. Report shares rose 5.25% after analysts at UBS named the ride-hailing giant one of their top stock picks and said they expect the company’s shares could more than double from current levels.
Snowflake (SNOW) – Get Snowflake, Inc. Class A Report shares surged 11.4% after the data-analytics software provider announced a narrower-than-expected quarterly loss and provided strong forward sales guidance.
Dollar General DG fell 2.44% after posting stronger-than-expected third quarter earnings and boosting its full-year sales forecast, as shoppers move to discounted retailers amid the highest levels of consumer price inflation in more than thirty years.
Staying in retail, Kroger (KR) – Get Kroger Co. Report shares surged 8.2% after the biggest U.S. grocery chain posted stronger-than-expected third quarter earnings and boosted its full-year profit guidance as food price inflation keeps demand for in-home meals elevated heading into the final months of the year.
In overseas markets, Europe’s Stoxx 600 was marked 1.5% lower by mid-day trading in Frankfurt as traders played catch-up to last night’s 900-point swing for the Dow following the Omicron infection confirmation, while in Asia, the region-wide MSCI ex-Japan index gained 0.58% and the Nikkei 225 ended 0.65% lower Tokyo at 27,753.37 points.
