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.