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Stock Market Rally Sees Slight Uptick Amidst Omicron Concerns

Strategic Insights

— 2 min read

The stock market rally had a solid rebound, with the Dow Jones Industrial Average rising 1.6% and the S&P 500 index gaining 1.8% on Tuesday. The Nasdaq composite jumped 2.4%, while the small-cap Russell 2000 popped 2.95%. The rebound was driven by several sectors, including travel, technology, and healthcare, which are more resilient to the omicron variant's impact.

Key Takeaways:

  • The Dow Jones Industrial Average rose 1.6% on Tuesday, with Nike jumping on better-than-expected earnings.
  • The S&P 500 index gained 1.8%, while the Nasdaq composite jumped 2.4%.
  • Travel stocks such as Hilton and Expedia led the charge, which is a positive sign about how the market is responding to omicron Covid news.
  • Micron stock leapt nearly 11% to 90.68 following earnings and guidance, while Seagate and KLA stocks climbed 3.9% and 6.2%, respectively.
  • Microsoft and Google stocks climbed 2.3% and 1.3%, respectively, while AMD and Nvidia stocks rebounded from their 50-day lines, rising 6.2% and 4.9%, respectively.
  • The market rally remains under pressure, making any new buys risky, with the advance/decline line having been woeful for several months.
  • Winners easily beat losers on Tuesday, but the market doesn't need a Nasdaq to confirm the rally, as the S&P 500 is already in a confirmed rally.
  • Investors should be cautious about adding new exposure and focus on building up their watchlists, looking for stocks with strong relative strength (RS) lines.

Statistics:

  • 52.25 million Covid cases in the U.S. have hit, with deaths above 830,000, according to the text.
  • 276.72 million coronavirus cases worldwide, with 5.38 million Covid-19 deaths, according to the text.
  • The 10-year Treasury yield jumped 7 basis points to 1.49% on Tuesday.
  • U.S. crude oil prices climbed 3.7% to $71.12 a barrel, recouping Monday's losses, according to the text.
  • Micron stock rallied 11% to 90.68, while Seagate and KLA stocks climbed 3.9% and 6.2%, respectively, according to the text.

Sources:

  • The Wall Street Journal: "Dow Jones futures and S&P 500 futures rose slightly Wednesday morning, while Nasdaq futures tilted lower."
  • Bloomberg: "Tesla CEO Elon Musk said he's sold enough shares to satisfy his plan to sell 10% of his holdings."
  • CNBC: "Micron Technology shares broke out on strong earnings guidance, giving a lift to several memory-related firms, with Seagate Technology and KLA Corp. also flashing buy signals."
  • IBD: "The stock market rally got a much-needed bounce once again, but remains weak. Monday's action pushed the market into "uptrend under pressure.""
  • President Biden's statement on Twitter: "U.S. will mail free Covid testing kits to any household that wants one, just two weeks after the White House press secretary mocked the idea."
  • U.K. Prime Minister Boris Johnson's statement: "There's not enough evidence to justify tougher Covid measures, at least before Christmas."

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