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Market Snapshot: Dow scores biggest point gain in more than a year, while S&P 500 ends 1.2% higher as omicron worries take a break

U.S. stock indexes traded higher Monday, with the Dow Jones Industrial Average heading for its best point and percentage gain in more than a year, as investors shrugged off fears about COVID’s omicron variant and prepared for new inflation data on Friday.

What’s happening

The Dow Jones Industrial Average
DJIA,
+1.87%

surged 750 points, or 2.2%, to 35,329, powered by strong point gains in UnitedHealth Group Inc.
UNH,
+2.40%
,
Goldman Sachs Group Inc.
GS,
+1.72%
,
Home Depot Inc.
HD,
+1.93%

and Boeing Co.
BA,
+3.72%

The S&P 500
SPX,
+1.17%

was trading 70 points, or 1.5%, higher at 4,608.

The Nasdaq Composite Index
COMP,
+0.93%

was up by 172 points, or 1.1%, at 15,257 after touching an early intraday nadir at 14,931.61.

The small-capitalization Russell 2000 index
RUT,
+2.05%

was trading up 56 points, or 2.6%, at about 2,215, heading for its best day since Nov. 1 when it rose 2.65%.

Last week, the Dow fell 0.9%, the S&P 500 declined 1.2%, and the Nasdaq Composite dropped 2.6%. Meanwhile, the The Russell 2000 last week fell into correction, commonly defined as a drop of at least 10% from a recent peak.

What’s driving markets

Investors shifted into risk-on mode on Monday, shrugging off uncertainty about the virus and concerns about the Federal Reserve’s policy path, even as strategists expected volatility to remain in force.

Airline and cruise-ship stocks, such as United Airlines Holdings Inc.
UAL,
+8.32%

and Carnival Corp.
CCL,
+8.08%
,
jumped amid encouraging comments from Dr. Anthony Fauci on the outlook of the omicron variant over the weekend. The popular exchange-traded fund U.S. Global Jets ETF
JETS,
+5.32%
,
which contains some of those names, and is often used to reflect reopening sentiment tied to COVID, was up 7.2%.

Read: Fed is widely seen backing a faster taper next week

On Sunday, Fauci told CNN’s “State of the Union” that early reports about the spread of the omicron variant of coronavirus suggest it might be less severe than initially feared, but that “we have really got to be careful” when comparing it to the delta wave. Reports from South Africa show that while the virus is rapidly spreading, hospitalizations aren’t.

“Reports of the omicron symptoms being less severe are boosting risk appetite, but it’s too soon to get carried away,” wrote Craig Erlam, a London-based senior market analyst for OANDA Corp. “I expect extreme caution to remain until the data gives us cause for more optimism.”

In a pre-emptive strike to control the virus, New York City Mayor Bill de Blasio announced new rules on Monday in which all private-sector employers will have to mandate vaccinations for their workers, starting later this month. Under new mandates for indoor dining, entertainment and gyms, two shots will be required for people over 12. One shot will be required for children aged 5 to 11, de Blasio said.

Meanwhile, traders continued to react to the implications of jobs for November, which showed slowing growth but a steep decline in unemployment, as they prepare for Friday’s release of consumer price data.

Read: Traders see next U.S. CPI reading close to 7% as volatile markets try to shake off omicron and Federal Reserve’s hawkish pivot

“Against this backdrop of uncertainty and angst, portfolio diversification, particularly considering exposure to both high yield and quality assets, remains the primary tool for investors,” wrote Seema Shah, chief strategist at Principal Global Investors.

Important news out of China also was being parsed for its potential impact on investor sentiment, as the People’s Bank of China cut the country’s reserve requirements for banks, while China Evergrande
3333,
-19.56%

admitted it might not be able to repay creditors.

This year “has been marked by a confluence of events that have no historical parallel: a unique growth surge, a supply-driven spike in inflation and new central bank frameworks that are stress-tested in real time,” Jean Boivin of BlackRock Investment Institute and others wrote in a note Monday.

“We are still overweight equities even as the omicron virus strain and the Fed’s catching up to inflation reality have hurt risk sentiment,” they wrote.

Which companies are in focus?

Special-purpose acquisition company Digital World Acquisition Corp.
DWAC,
-2.58%
,
which plans to merge with Trump Media & Technology Group, said it received preliminary, fact-finding inquiries from regulatory authorities and is cooperating. Shares were down 2.7%.

Shares of Lucid Group Inc. LCID were down 5.5% after the California-based electric-vehicle maker disclosed that it was subpoenaed by the Securities and Exchange Commission related to an investigation. 

Jack in the Box Inc. JACK said Monday it will pay $12.51 a share for Del Taco Restaurants IncTACO in a deal valued at about $575 million. Shares of Jack were down 4.1%, while Del Taco shares surged 66%.

BuzzFeed Inc. BZFD shares traded 6.6% lower in the stock’s trading debut on the Nasdaq Monday after the digital media company closed its business combination with 890 5th Avenue Partners Inc., a special-purpose acquisition company.

Becton Dickinson & CoBDX said Monday that the spinoff of its diabetes care business will be named “embecta.” Its stock was up 2%.

Shares of Moderna Inc.
MRNA,
-13.49%
,
were down almost 15% as investors wrestled with news of the omicron variant.

How are other assets trading?

The yield on the 10-year Treasury note BX:TMUBMUSD10Y rose Monday to 1.431%, up from 1.342%. Prices for Treasurys fall as yields rise.

The ICE U.S. Dollar Index DXY, a measure of the currency against a half-dozen other monetary units, was up 0.2%

In oil futures, West Texas Intermediate crude CL00 for January delivery CLF22 rose 4% to $69.01 a barrel, after notching a sixth straight week of declines last week.

Gold futures GC00 for February delivery GCG22 ended lower, falling $4.40 or nearly 0.3%, to settle at $1,779.50 an ounce.

The Stoxx Europe 600 Index SXXP closed up 1.3% higher on Monday. London’s FTSE 100 Index UKX closed up 1.5%, marking its largest one-day point gain since July 21.

In Asia, the Shanghai Composite Index SHCOMP closed 0.5% lower, while the Hang Seng Index HSI ended 1.8% lower in Hong Kong. Japan’s Nikkei 225 Index NIK fell 0.4%.

— Steve Goldstein contributed to this article

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