The Dow Jones Industrial Average jumped more than 650 points on Monday as stocks continued to swing wildly by the day amid the uncertain threat of the Omicron variant of the coronavirus.
The Dow was last seen trading more than 1.9 percent higher as investors shrugged off the new variant and ditched expensive tech stocks for those in travel, entertainment and other sectors linked to the global economic recovery.
At the same time, the S&P 500 was up a more modest 1.2 percent while the tech-heavy Nasdaq was up just 0.5 percent.
Some of the day’s biggest winners were travel stocks that were hit particularly hard last week by the discovery of the Omicron variant and fears that it could spark a fresh wave of restrictions around the world.
Carnival Corp and Royal Caribbean both surged almost 10 percent by noon while Norwegian Cruise Line was up more than 11 percent.
Delta Air Lines was up more than 8 percent as American Airlines surged almost 10 percent.
High-growth tech stocks had a tougher day with investors, perhaps preparing for a speedier-than-expected tapering of the central bank’s bond-buying program, continued to sell off.
Shares of Tesla, for example, were down more than 3 percent by mid-day after Reuters reported the Securities and Exchange Commission has opened an investigation into the company in response to a whistleblower complaint from a former Tesla employee about fire risks associated with its solar panel systems.
Other high-growth picks were also down, including Nvidia and Moderna. And stay-at-home picks like Peloton and Zoom also fell after getting a boost last week amid the fears around Omicron.
Federal Reserve chairman Jerome Powell spooked tech investors last week when he warned that the central bank will still discuss hastening the tapering of the bond-buying program at its December meeting, despite new threats posed by the Omicron variant.
The program’s currently being wound down at a $15 billion-a-month pace.
“At this point, the economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases … perhaps a few months sooner,” Powell said. “I expect that we will discuss that at our upcoming meeting.”
Powell’s remarks — along with the trickle of information about whether the new COVID-19 variant is resistant to vaccines, more infectious or more deadly — helped ensure the Dow finished last week in the red in what was a historically volatile week.
Ryan Detrick, chief market strategist for LPL Financial, said he’s bullish on the market headed into the end of the year, but warned the volatility of last week is likely hear to stay.
“Although we do expect this volatility to continue, it very well could be a buying opportunity. We’ve been living with COVID-19 for more than 20 months now. We’ve seen several variants and managed to move forward, and we expect a similar playbook to work once again,” he said.
“Omicron has put quite the wrinkle in the recent bull market, but stocks are still up more than 20% for the year, so it is good to put things in perspective.
“We aren’t minimizing the Omicron uncertainty, but we remain bullish that the recovery is alive and well, with a very healthy consumer and corporate earnings backdrop leading the way. Buckle up though, as big swings on daily news could be here for several more weeks. But in the end, we expect any lost output due to Omicron to simply be pushed out and recovered by early next year.”