Technology leads biggest stock rally since March – Los Angeles Times

U.S. stocks staged the biggest rally in nine months, with major averages climbing on optimism the coronavirus’ Omicron variant won’t derail global growth. Treasuries fell, sending two-year yields to their highest level since March 2020.
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 5% and small-cap stocks climbed 2%.
The Standard & Poor’s 500 index erased all the losses suffered after Fed Chair Jerome H. 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 5 points to 22. The dollar fell and crude oil rose above $71 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 moved to expand support for the economy. Among the riskiest assets, a Goldman Sachs Group Inc. basket of nonprofitable tech firms jumped nearly 6% on Tuesday, clawing back almost half of last week’s losses.
“The market mood has been notably more upbeat this week after several health experts across the globe, including the U.S.’ Dr. Anthony Fauci, have said Omicron symptoms appear milder, so far,” said Fiona Cincotta, senior financial markets analyst at City Index. “Whilst it is still early days, the encouraging news sparked bargain hunters into action. Who would want to miss out on the possibility that a milder variant could accelerate natural immunity to COVID?”
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. United Kingdom 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.
Additionally, research showed that a COVID-19 vaccine from GlaxoSmithKline and Canada’s Medicago Inc. was effective against multiple variants of the disease. Congress also reached a deal to raise the nation’s debt ceiling.
“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,” said 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.”
However, equity markets could still be in for further turbulence amid new restrictions to stem the spread of Omicron and resurfacing geopolitical tensions. The threat of sanctions still looms if Russia invades Ukraine, after a call between U.S. and Russian leaders Tuesday. China threatened the U.S. with retaliation for its decision to declare a diplomatic boycott of the Winter Olympics. And Treasury Secretary Janet L. Yellen said that U.S. reliance on foreign supply chains has proved a vulnerability, boosting policies that may be considered protectionist.
With possible head winds ahead, George Pearkes, global macro strategist at Bespoke Investment Group, said the tech rally “feels really extreme.”
“Mostly this just feels like a counter-trend move after some big negative catalysts and sentiment challenges hit the market over the past couple of weeks, but I’m surprised it’s as large as it is,” he said.
— With assistance from Bloomberg writers Abigail Moses, Andreea Papuc, Shen Hong and Katie Greifeld.
Your guide to our clean energy future
Get our Boiling Point newsletter for the latest on the power sector, water wars and more — and what they mean for California.
You may occasionally receive promotional content from the Los Angeles Times.
More From the Los Angeles Times
Business
Striking Kellogg workers reject contract offer with 3% raises

California
Photos: Is the port less crowded? Depends on whom you ask

Business
Are you a first-time home buyer in Southern California? We want to hear from you

Business
Biden nominee Saule Omarova withdraws from banking watchdog role

Subscribers Are Reading
California
Lizard people, deadly orgies and JFK: How QAnon hijacked Hollywood to spread conspiracies
California
Armed robbers break into Palisades home during holiday party
High School Sports
Plaschke: Parents of ex-Mater Dei football player share new details of attack, school response
Food
These are the best restaurants in L.A.
USC Sports
Lincoln Riley jetted for USC, and Oklahoma is left to furiously wonder why
Latest Business
Business
Amazon packages pile up as AWS outage spawns delivery havoc

Real Estate
Jim Belushi unloads Brentwood villa for $30 million

Company Town
Federal judge dismisses Rose McGowan’s RICO lawsuit against Harvey Weinstein and his lawyers

Business
Column: Sinclair Lewis’ fiery 1935 novel about a fascist coup is disturbingly prophetic

World & Nation
Rohingya refugees sue Facebook for $150 billion, alleging it fomented violence

Subscribe for unlimited access
Follow Us

source