The stock market surged on Tuesday, extending a strong rebound from last week’s rough patch as concerns about the omicron variant continued to abate and investors bet on shares linked to the economic recovery.
The Dow Jones Industrial Average rose 1.4%, around 500 points, while the S&P 500 gained 2.1% and the Nasdaq Composite 3%.
Stocks added to Monday’s gains, continuing a rebound from last week’s selloff, when market volatility surged after the emergence of the new Covid omicron variant.
Shares of companies linked to the economic recovery—including airlines, cruises, casinos and other travel-related stocks—continued to lead the stock market higher.
Investors now appear to be less spooked by the omicron variant amid reports that it causes milder symptoms than feared, with the nation’s top pandemic expert Dr. Anthony Fauci saying on Sunday that initial data was “encouraging.”
Despite struggling in recent weeks due to Covid-related selling, tech stocks staged a comeback rally on Tuesday, while shares of chipmakers like Intel and Nvidia also registered big gains, rising around 3% and 8%, respectively.
Shares of Big Tech giants, including Microsoft, Alphabet, Amazon and Apple, all rose by around 2% or more.
Stocks have now registered solid gains for two days in a row. The Dow and S&P rose 1.9% and 1.2%, respectively, on Monday as investors brushed off concerns about the omicron variant. While the recent gains are a reversal from last week’s selloff, investors will now be closely watching the Federal Reserve, which is expected to speed up the tapering of its pandemic bond-buying program at its December meeting next week. Markets now also expect the central bank to raise interest rates as soon as next May in a bid to deal with surging inflation, which Fed chair Jerome Powell recently said could linger “well into next year.”
“The omicron reality is proving to be substantially less draconian than feared, but we’d caution investors against waving the all-clear flag too aggressively (there is still a lot that’s not known),” says Vital Knowledge founder Adam Crisafulli. “We’re also encouraged by the resetting of Fed expectations,” he added, though “the market doesn’t seem to appreciate the extent to which monetary policy, which underwrote the bulk of the years-long tech-led ramp, is changing.”
Despite the market having its worst day of the year on Friday, November 26—with the Dow dropping 950 points, investors bought the dip en masse last week, according to recent data from Bank of America. The firm said that total stock inflows from clients totaled $6.7 billion last week—the highest intake since 2017.