The Dow Jones Industrial Average soared on Thursday as investors shrugged off news of the second case of Omicron in the US and sought to mount a comeback from the sell-off earlier this week.
The Dow surged more than 600 points, or some 1.8 percent, in midday trading, wiping out Wednesday’s losses of 462 points and even recouping some of Tuesday’s plummet.
The S&P 500 and the Nasdaq similarly rose 1.4 percent and 0.6 percent, respectively.
The surge was broad-based and led by so-called reopening stocks like airlines, casinos, hotels and other travel sectors.
Apple was one of the few stocks in the red on Thursday after Bloomberg reported the company has told suppliers that demand for its new iPhone 13 lineup has fallen ahead of the holiday season, prompting the tech giant to slash its production goal for the crucial year end.
The broad-based market gains came even as health officials in Minnesota announced that a resident tested positive for the Omicron variant of COVID-19.
The resident had recently attended a conference at the Javits Center in New York City, spurring Mayor Bill de Blasio to announce that community transmission ought to be expected in the Big Apple.
Investors were also likely reacting to a better-than-expected weekly jobless claims report that showed new claims surged higher compared with the week prior, but by less than was expected and remained in the range of pre-pandemic norms.
David Bahnsen, chief investment officer of The Bahnsen Group, said the fears surrounding the Omicron variant are likely shaking some of the froth out of the overheated markets.
“Omicron is not a market event, but it triggers weak hands to shoot first and act rational later,” he said, adding that “the economy will not be shut down over COVID.”
In the short term, he added, the Federal Reserve is “going to maintain an accommodative bias” and while it could hasten the tapering of the central bank’s bond-buying program, as Chairman Jerome Powell suggested earlier this week, that doesn’t mean it’ll hike interest rates any sooner than planned.
Nonetheless, Bahnsen said, uncertainty over the Fed’s response to the arrival of the Omicron variant is likely adding to market jitters.
The Dow and the two other indices still have a ways to go before recovering from all of the losses seen earlier this week and last Friday.
Tuesday’s sell-off left the Dow 650 points lower before Wednesday’s even further decline.
The Omicron variant has been found in more than two dozen countries — and now in the US.
The emergence of the new variant has spurred countries around the world to implement travel restrictions once again — though public health experts are split on the effectiveness of such measures and whether it’s the right course of action.
Little remains known about the new variant, with some warning that it’s likely to reduce the effectiveness of the currently available vaccines and medications while others point to signs that it may lead to less severe sickness while being more transmissible.
The uncertainty has thrown investors into a frenzy as they try to figure out how to position themselves on the current state of the pandemic.