👀 Copy Legendary Investors' Portfolios in One ClickCopy For Free

S&P 500 Rides Cyclicals, Tech Turnaround Higher as Omicron Fears Ease

Published 06/12/2021, 22:36
© Reuters.
US500
-
WFC
-
IXIC
-
SPX
-

By Yasin Ebrahim

Investing.com – The S&P 500 closed higher Monday, as easing fears about the impact of the Omicron variant of Covid-19 renewed investor bets on cyclical stocks, while a intraday rebound in tech also pushed the broader market higher.

The S&P 500 rose 1.2%, the Dow Jones Industrial Average gained 1.9%, or 646 points, the Nasdaq climbed 0.9%.  

The latest updates on the Omicron variant suggest the new coronavirus strain is less deadly than feared, easing investor fears about a potential economic fallout.

"[A]lthough it’s too early to make any definitive statements about it, thus far it does not look like there’s a great degree of severity to it," said Dr. Anthony Fauci, President Joe Biden's chief medical adviser, on CNN on Sunday.   

Renewed optimism on the recovery pushed cyclical stocks including financials and energy higher.

Financials, mostly banks, were also boosted by a rebound in Treasury yields following a rout last week, with the United States 10-Year yield rising above 1.4%.

First Republic Bank (NYSE:FRC), State Street (NYSE:STT), and Wells Fargo (NYSE:WFC) were sharply up more than 3% as rising Treasury yields boosts the net interest margin of banks – the difference between the interest income generated by banks and the amount of interest paid out to depositors.

As well as rising Treasury yields, Wells Fargo was boosted by an upgrade from Morgan Stanley.

Morgan Stanley upgraded Wells Fargo to overweight from equal weight amid expectations for a faster pace of Federal Reserve rate hikes.

Energy, meanwhile, was pushed higher by rising oil prices after Saudi Arabia hiked its selling prices for oil exports to U.S. and Asian customers.

"Today’s upswing was sparked by Saudi Arabia’s raising of its official selling prices at the weekend," Commerzbank said in a note. "The world’s largest exporter will be charging a higher price premium for oil deliveries to Asia in January than in the previous month."

Reopening sectors of the market including airlines, cruise lines, and hospitality stocks were in the ascendency. 

American Airlines (NASDAQ:AAL), Carnival (NYSE:CCL), and Wynn Resorts (NASDAQ:WYNN) shares were sharply higher. 

Tech jumped, adding to the broader market melt-up as investors bought the dip in big tech.

Semiconductor stocks, however, weighed on tech as Nvidia (NASDAQ:NVDA) slipped about 3% adding to recent losses.

Micron Technology Inc (NASDAQ:MU) was up more than 1% after Cowen hiked its price target on the stock to $99 from $80, as growing memory demand and tight supplies are expected to bolster the chipmaker's performance.

In electrical vehicle stocks Tesla (NASDAQ:TSLA) and Lucid (NASDAQ:LCID) were among the biggest decliners following regulatory troubles.

Lucid Group fell 5% after receiving a subpoena from the Securities and Exchange Commission related to its special purpose acquisition company merger deal with Churchill Capital Corp.

Tesla cut losses to end flat even despite U.S. Securities and Exchange Commission launching a probe into a whistleblower claims alleging the company had failed to notify its shareholders of solar panel defects, Reuters reported, citing a letter from the agency.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.