Wall Street's rally stretches to second day as Omicron concerns ease

The benchmark S&P 500 index rose 2.1 per cent. PHOTO: REUTERS

NEW YORK (NYTIMES) - Stocks jumped on Tuesday (Dec 7), with the S&P 500 extending a rally as investors shook off concerns over the severity of the Omicron variant of the coronavirus. The benchmark index rose 2.1 per cent, adding to a gain of 1.2 per cent on Monday, for its best two-day stretch in a year.

The Nasdaq composite gained 3 per cent. Shares of big tech stocks helped lead the rally. The S&P 500 has nearly erased declines that left the index down more than 3 per cent after the Omicron variant was first disclosed.

Though much remains unknown about the variant, the gains have come amid optimism about its potency: Researchers in South Africa said patients were much less sick than those they had treated before, suggesting the variant might be less severe than other forms of the virus.

Investors are also waiting for a snapshot on inflation on Friday, when the Labour Department is set to publish its Consumer Price Index for November. Federal Reserve officials have signalled the central bank is ready to speed its pullback on monetary stimulus that has helped support the economy since the start of the pandemic.

The Fed's signalling comes amid ongoing supply chain disruptions and uncertainty over how the Omicron variant could hamper the economic recovery. Mr Jerome Powell, the Federal Reserve chairman, has said he expects central bank officials to discuss slowing bond purchases faster at the Fed's next meeting, scheduled for Dec 14-15, when they will have a better sense of the new variant and updated inflation data.

Mr Powell signalled that the Fed's standard for lifting interest rates when it comes to inflation, which have remained set near zero, had been met, meaning that central bankers would be looking to the job market as they weighed when, whether and how much to raise borrowing costs.

"We're not out of the woods yet," said Ms Lindsey Bell, chief markets and money strategist at Ally Invest. "There are still some known unknowns out there that could add anxiety into the markets."

Oil prices also jumped on Tuesday, with West Texas Intermediate, the US crude benchmark, up 3.7 per cent to US$72.05 a barrel, and energy stocks were among the best performers in the S&P 500. Devon Energy Corp rose about 6.5 per cent on Tuesday, while Enphase Energy was 4.5 per cent higher.

Shares of Intel rose about 3 per cent after the semiconductor manufacturer announced on Monday that it planned to take its self-driving unit, Mobileye, public. A number of large tech companies were also higher, helping lift the broader market. Alphabet, Amazon, Apple and Microsoft were all up more than 2.5 per cent.

Chinese companies trading in the United States also rallied. JD.com, the e-commerce company, rose 3.9 per cent, while its rival Alibaba climbed about 1.6 per cent. Overnight, the Hang Seng Index in Hong Kong rose 2.7 per cent, after China Evergrande, the troubled property company with US$300 billion (S$410 billion) in obligations, said that it was set to restructure itself with the help of several state-backed institutions.

The Chinese government's loosening of lending restrictions relieved investors amid signs of broader economic slowdown. "Crude prices continue to rebound on optimism economic activity will get a boost from both easing Omicron virus jitters and on additional easing from China," Mr Edward Moya, a senior market analyst at Oanda, a currency exchange and brokerage firm, wrote in a note.

Cryptocurrencies rose on Tuesday, with Bitcoin recovering from a sharp plunge during the weekend. The price for Bitcoin was up more than 3 per cent to about US$50,500, according to CoinDesk.

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