The Dow Jones Industrial Average jumped over 650 points on Monday as stocks jumped wildly on the day amid the uncertain threat of the Omicron version of the coronavirus.
- Advertisement -
The Dow was last seen trading up more than 1.9 per cent as investors closed out the new volume and left expensive tech stocks for travel, entertainment and other sectors tied to the global economic recovery.
At the same time, the S&P 500 was up a more modest 1.2 percent, while the tech-heavy Nasdaq was up just 0.5 percent.
Some of the day’s biggest winners were travel stocks that were hit particularly hard by the discovery of the Omicron version last week and fears it could spark a new wave of sanctions around the world.
By noon both Carnival Corp and Royal Caribbean were up about 10 percent, while Norwegian Cruise Line was up more than 11 percent.
- Advertisement -
Delta Air Lines was up more than 8 percent as American Airlines grew nearly 10 percent.
High-growth tech stocks had a rough day with investors, perhaps preparing to dilute faster than expected, as the central bank’s bond-buying program continued to sell.
For example, Tesla shares were down more than 3 percent as of late afternoon. Reuters The Securities and Exchange Commission has opened an investigation into the company in response to a whistleblower complaint from a former Tesla employee about fire risks associated with its solar panel systems, the report said.
Other high-growth picks were also down, including Nvidia and Moderna. And stay-at-home picks like Peloton and Zoom also fell after receiving a boost last week amid fears surrounding Omicron.
Federal Reserve Chairman Jerome Powell stunned tech investors last week when he warned that the central bank would still discuss accelerating the tapering of the bond-buying program at its December meeting, despite new threats posed by the Omicron version.
The program is currently closing at a pace of $15 billion per month.
“At this point, the economy is very strong and inflationary pressures are high, and so I think it’s reasonable to consider ending the taper of our asset purchases … maybe a few months earlier,” Powell said. “I hope we will discuss this in our upcoming meeting.”
Powell’s remarks – along with information about whether the new COVID-19 variant is resistant to vaccines, more contagious or more deadly – helped ensure the Dow ended last week in the red It was a historically volatile week.
Ryan Detrick, chief market strategist at LPL Financial, said he was bullish on the market at the end of the year, but warned that last week’s volatility is likely to remain.
“While we expect this volatility to continue, it could very well be a buying opportunity. We have been living with COVID-19 for over 20 months. We have seen many variants and managed to move forward. We have been there, and we look forward to seeing a similar playbook work again.”
“Omicron has put in a lot of wrinkles in the recent bull run, but the stock is still up over 20% for the year, so it’s good to put things in perspective.
“We are not reducing Omicron uncertainty, but we remain optimistic that the recovery is alive and well, leading the way with a very healthy consumer and corporate income background. Relax, though, because Major changes in daily news may take several more weeks. But in the end, we expect any lost production due to Omicron to be easily pushed out and recovered early next year.”