A trader on the floor of the New York Stock Exchange (NYSE) on Thursday, November 18, 2021.
Michael Nagel | Bloomberg | Getty Images
Stock futures indicated a rebound after Friday’s big sell-off as investors watch the latest developments related to the Covid-Omicron variant and assess its potential market impact.
Futures on the Dow Jones Industrial Average gained 255 points, or 0.7%. S&P 500 futures rose 0.9% and Nasdaq 100 futures rose 1%.
Stocks come from a holiday-cut session on Friday when the Dow had its worst day since October 2020. The Dow lost 905 points, or 2.5%. The S&P 500 lost 2.3% and the Nasdaq Composite lost 2.2%. The three main indices were negative for the week.
The World Health Organization called the Omicron strain a “worrying variant” on Friday. While scientists continue to research the variant, the large number of mutations in omicron has sounded the alarm. Preliminary evidence suggests that the strain has an increased risk of reinfection, according to the WHO. The variant was first reported to the WHO from South Africa and has been found in the UK, Israel, Belgium, the Netherlands, Germany, Italy, Australia and Hong Kong, but not yet in the US.Many countries, including the US, are after. Restrict travel to southern Africa.
The South African doctor who first sounded the alarm about the new variant told the BBC that the patients had “extremely mild” symptoms, even though it was too early to determine how Omicron was behaving before it was examined closely.
“While it’s too early to be definitive, early data reported suggests that Omicron virus causes ‘mild to moderate’ symptoms (less severe) and is more easily transmitted,” tweeted Bill Ackman of Pershing Square Capital Management on Sunday evening . “If this turns out to be true, it is bullish for the markets, not bearish.”
Stocks, which were hardest hit on Friday, rallied the most on Monday.
Travel-related stocks rose across the board. Carnival and Norwegian cruise lines both gained more than 4% in pre-trading. American, Delta and United Airlines each gained more than 2%. The booking inventory increased by 2%. Boeing gained 1.7%.
“We would be aggressive buyers of this pullback,” Fundstrat’s Tom Lee wrote in a customer note on Sunday evening. “As with the beta and delta variants, the ‘bark’ in each of these precedents has proven worse than the bite. The market slaughter, in our view, will be short-lived and temporary.”
10-year government bond yields bounced back over 1.5% after a flight to safety on Friday caused investors to climb into bonds and lower interest rates (prices move in the opposite direction to yields). Bank of America, American Express, and other financial stocks benefited from the recovery in returns.
One stock that continued its Friday trend was Moderna. The vaccine maker’s stock rose another 10% in pre-trading hours after rising 20% on Friday.
Vaccine manufacturers have announced measures to investigate Omicron, with testing already ongoing. While it remains to be seen how Omicron will respond to current vaccines or whether new formulations will be required, Paul Burton, Chief Medical Officer of Moderna, said on Sunday that the vaccine maker will launch a newly formulated vaccine against the Omicron variant early next year could.
In addition to Covid developments, investors can also expect key economic data to be released this week.
Friday’s November jobs report is expected to show solid employment growth. Economists polled by Dow Jones expect 581,000 new jobs in November. The Institute of Supply Management industry survey is due out Wednesday, and economists expect strong results as well.
“The pandemic and COVID variants remain one of the greatest risks to the markets and are likely to continue to create volatility for the next few years. It’s hard to say right now how sustainable or effective this newest twist will be in the markets. “Keith Lerner, Co-Chief Investment Officer at Truist Advisory Services, said in a note Friday.