US stocks start higher, regain strength after Friday’s decline

US stocks start higher, regain strength after Friday’s decline

Beijing Stocks rose broadly on Wall Street on Monday as markets regained their footing after a major stumble on Friday amid concerns about the spread of the new type of coronavirus.

The S&P 500 was up 1% as of 9:44 AM ET. The benchmark index fell 2.3 percent on Friday, its worst day since February. The Dow Jones Industrial Average rose 192 points, or 0.6 percent, to 35.073 points, and the Nasdaq gained 1.2 percent.

Tech companies made some of the biggest gains. Apple shares rose 2.2 percent and Microsoft 2.4 percent. A wide range of retailers and other companies that rely on consumer spending also posted strong gains. Amazon shares rose 1.3 percent and Nike 1.4 percent.

Travel-related stocks, which suffered on Friday, regained some of their gains. Marriott shares rose 3.2 percent and Expedia 2.7 percent. US crude oil prices jumped 5.7%.

Like stocks, the bond market and other corners of Wall Street also stabilized after the sudden reaction on Friday to sprint towards safety and shy away from risky investments. With vaccines on hand, the world may be in a better position to weather this potential new wave. In addition, Friday’s market moves may have been exacerbated by many professional traders taking the day off after Thanksgiving.

ad

ā€œSo as the initial shock fades a bit, traders can look forward to opportunities and accept the possibility of some short-term volatility associated with a possible new wave,ā€ Chris Larkin, managing director of trading at E-Trade Financial, said in a statement.

The yield on the 10-year Treasury rose to 1.55% from 1.49% late Friday, recovering nearly half of its sharp decline from that day. It tends to rise and fall with expectations for the strength of the economy and inflation.

Meanwhile, 2-year Treasury yields rose as traders reconsidered guesses made on Friday that Omicron would push the Federal Reserve to delay an interest rate hike. It rose to 0.54% from 0.50% late on Friday.

Investors are now pricing in a 67% probability that the Fed will raise interest rates from its record low of nearly zero by mid-June. On Friday, when omicron’s concerns raised questions about whether the economy would need more help with lower rates, investors lowered that probability to 62%.

ad

Despite the reversal from Friday for yields and other areas of the market, they are still well below the level they were before omicron concerns erupted in the markets.

Consider the VIX, an indicator that measures how worried investors are about the upcoming declines in the S&P 500. It slipped more than 14% to 24.44, but is still significantly higher than it was before Thanksgiving, at 18.58.

The broader market has been gaining momentum since early 2021 when vaccines were introduced in an effort to combat the virus pandemic that stunned the global economy in 2020. Much of investor concern has focused on rising inflation potentially holding back what was solid recovery. COVID-19 has been an ongoing concern.

The sudden rise in the number of cases from the delta variant hampered consumer spending and worried investors during the summer. The latest threat from COVD-19 comes from the omicron variant, which was first detected in South Africa and appears to be spreading worldwide. Both the European Union and the United Kingdom announced travel restrictions from South Africa on Friday. The United States also imposed travel restrictions on arrivals from South Africa as well as seven other African countries.

ad

The threat of a new surge in cases threatens to shock the global economy just as people plan vacation travel and businesses rely on holiday shoppers. It can also complicate planning by central banks deciding when and how to withdraw stimulus measures that have helped keep interest rates low and shore up stocks.

___

Business writer Stan Choi contributed to the AP.

Copyright 2021 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.

Leave a Reply

Your email address will not be published. Required fields are marked *