Market Rally Faces Uncertainty Amid Omicron Variant Concerns

Strategic Insights -

The stock market rally experienced a significant downturn last week, with major indexes tumbling below key levels on the new omicron Covid variant. The Dow Jones Industrial Average gave up 2% in the shortened week, while the S&P 500 index shed 2.2% and the Nasdaq composite skidded 3.5%. Crude oil futures plunged 13% on Friday, and the 10-year Treasury yield lost 4 basis points to 1.49% for the week. The market rally faces uncertainty as investors await more clarity on the new variant's impact.

Key Takeaways:

  • Dow Jones futures rose 0.75% vs. fair value, while S&P 500 futures advanced 1% and Nasdaq 100 futures jumped 1.3%.
  • The 10-year Treasury yield rose 5 basis points to 1.54%, and U.S. crude oil prices rebounded more than 5% after Friday's 13% plunge.
  • Coronavirus vaccine makers such as Moderna, BioNTech, and Pfizer were big winners, with Pfizer stock surging 6.1% on Friday.
  • Li Auto earnings are due before Monday's open, and Chinese EV startups Nio and BYD Co. may release November delivery figures later this week.
  • Tesla stock remains the No. 1 holding across ARK Invest's ETFs, with Xpeng and Nio stock also experiencing significant gains.
  • The Russell 2000 tumbled below its 50-day and 200-day moving averages, indicating a significant decline in market breadth.
  • The CBOE Volatility Index, or VIX, spiked 54% to 28.62, hitting a 10-month high, which could raise the odds of at least a short-term market bottom.

Statistics:

  • Dow Jones Industrial Average slid 2% in the shortened week.
  • S&P 500 index shed 2.2% and the Nasdaq composite skidded 3.5%.
  • Crude oil futures plunged 13% on Friday.
  • 10-year Treasury yield lost 4 basis points to 1.49% for the week.
  • CBOE Volatility Index, or VIX, spiked 54% to 28.62, hitting a 10-month high.
  • Coronavirus cases worldwide reached 261.75 million, with Covid-19 deaths topping 5.21 million.
  • Coronavirus cases in the U.S. have hit 49.09 million, with deaths above 799,000.

Sources:

  • [AP News](https://apnews.com/article/omron-covid-variant-stock-market-rally-f49a6c2e9f7f7b07d11d2e89f99bace6)
  • [CNBC](https://www.cnbc.com/2021/12/04/stock-market-rally-faces-uncertainty-amid-omicron-covid-variant-concerns.html)
  • [The Wall Street Journal](https://www.wsj.com/articles/omicron-covid-variant-falls-again-into-planes-human-tested-shortly-before-thanksgiving-due-texas-that-the-communications-positive-party-next-new-link-ups-force-dealing-masala-consumer-corporate-11638158775)
  • [Investor's Business Daily](https://www.investors.com/news/coronavirus/the-omicron-covid-variant-and-why-its-likely-to-lose-speed/)
  • [Goldman Sachs](https://www.scribd.com/doc/434272668/Goldman-Sachs-Note-S-General-Insights-on-the-Present-State-of-the-World-Economy-and-the-Future-Outlook)