What You Need to Know
- The S&P 500 erased all the losses suffered after Jerome Powell’s hawkish tilt a week ago.
U.S. stocks staged the biggest rally since March, with major averages surging at least 2% on optimism the omicron variant won’t derail global growth. Treasuries fell, sending two-year yields to the highest in nine months.
Technology shares that led last week’s decline paced the rebound. The Nasdaq 100 Index surged 3%, an ETF that tracks newly public companies jumped almost 5% and small caps climbed 3%.
The S&P 500 erased all the losses suffered after Jerome Powell’s hawkish tilt a week ago and was just 0.3% below its last close before the omicron variant rocked markets. The Cboe Volatility Index plunged six points to 21. Bitcoin rallied, the dollar dipped and crude surged past $72 a barrel in New York.
Risk assets are recovering this week after initial data showed the surge in omicron cases hasn’t overwhelmed hospitals and as China’s moves help settle markets whipped by bouts of volatility. Among the riskiest assets, a Goldman Sachs Group Inc. basket of non-profitable tech firms jumped almost 7% Tuesday, clawing back nearly half of last week’s losses.
What Your Peers Are Reading
“This morning’s rally is being fueled by the belief that the omicron variant will not create many problems for the global economy and that China has pledged measures to support economic growth,” wrote Matt Maley, chief market strategist for Miller Tabak + Co.
“If those were the reasons why the market has seen such a big increase in volatility since Thanksgiving, we’d agree the worst is likely over and that investors should jump back into the market with both feet,” Maley added.
On the data front, the U.S. trade deficit narrowed while third quarter productivity fell. Private consumption was the largest contributor to the euro area’s most recent economic expansion. U.K. house prices hit an all-time high. And China’s exports grew faster than expected to a record on external demand and an easing power crunch.
Meanwhile, research showed that a Covid-19 vaccine from GlaxoSmithKline Plc and Canada’s Medicago Inc. was effective against multiple variants of the disease.