North American stock indexes and oil prices made gains on Wednesday after investors cheered positive economic data and the White House said it was resuming talks on a major social spending bill with a senator crucial to passing the legislation.
The market opened mostly flat on jitters about the Omicron COVID-19 variant but gained throughout the trading session, pushed upward by improving U.S. consumer confidence and gross domestic product growth. The positive swing continued Tuesday’s trend, when stocks recouped losses.
“With COVID fears, there’s not as much worry as before,” said Anu Gaggar, global investment strategist for Commonwealth Financial Network. “It may not have as much of an impact on the economy. (U.S. President Joe) Biden has said we won’t go back to lockdown.”
The White House said on Wednesday that it would continue talks with Senator Joe Manchin, who delivered what appeared to be a fatal blow to Biden’s Build Back Better bill over the weekend by saying he would not support it.
Gaggar added that volatility in December has been much higher than usually seen, and that her conviction is that the “Santa Claus rally is slightly lower this year.”
The so-called “Santa Claus rally” is the last five trading days of the year and the first two of the next year, when stocks often are higher. According to an article from LPL Financial, if Santa does not come, it could portend a bear market.
Riskier currencies such as the Australian dollar recovered against the U.S. dollar on Tuesday, while U.S. Treasury traders discounted the threat of long-term inflation as the yield curve flattened.
In Toronto, the S&P/TSX composite index surged in after noon trading, finishing up 145.18 points, or 0.69%, at 21,070.05 a day after reporting its biggest gain since February.
The energy sector reversed early losses and finished up 1.2% as U.S. crude prices were up 0.4% a barrel, while the materials sector, which includes precious and base metals miners and fertilizer companies, rose 1%.
Technology stocks were 0.7% higher, with a 11.3% jump in Dye & Durham Ltd. after the IT service provider said on Tuesday it will acquire Australia-listed Link Administration Holdings Ltd for about $3.2-billion.
Leading losses were the healthcare stocks, down 0.3%, weighed by pot producers Canopy Growth Corp., Cronos Group Inc. and Aurora Cannabis Inc., which were all down.
Wall Street’s main indexes also climbed for a second straight session as volatility has ratcheted up in the last month of 2021 following the arrival of Omicron and an otherwise strong year for equities.
A South African study suggested reduced risks of hospitalization and severe disease in people infected with the Omicron variant versus the Delta one, but World Health Organization officials cautioned that it was too soon to draw firm conclusions.
“We are still struggling for direction in the face of the Omicron outbreak, but in the past few days ... more and more evidence is building that the strain is potentially less severe than prior strains, specifically Delta, which bodes well for economic momentum in 2022,” said Mike Stritch, chief investment officer at BMO Wealth Management.
According to preliminary data, the S&P 500 gained 47.50 points, or 1.02%, to end at 4,696.73 points, while the Nasdaq Composite gained 180.81 points, or 1.18%, to 15,521.89. The Dow Jones Industrial Average rose 262.58 points, or 0.74%, to 35,755.28.
Tesla Inc shares rose, boosting the S&P 500 and Nasdaq. Tesla Chief Executive Elon Musk said in an interview he has sold “enough stock” following several weeks of share sales by the billionaire.
U.S. consumer confidence improved further in December, suggesting the economy would continue to expand in 2022. The survey from the Conference Board showed more consumers planned to buy a house and big-ticket items such as motor vehicles and major household appliances as well as go on vacation over the next six months.
Other reports showed U.S. home sales increased for a third straight month in November, and that gross domestic product increased at a 2.3% annualized rate in the July-September quarter, revised up from the 2.1% rate estimated last month.
In another encouraging development against the pandemic, the U.S. authorized Pfizer Inc’s oral antiviral COVID-19 pill for at-risk people aged 12 and above, making it the first at-home treatment for the coronavirus.
MSCI’s gauge of stocks across the globe gained 0.73%.
Oil prices climbed as fears of tight supply and drawdowns in the United States offset concerns about COVID-19 dampening demand. U.S. crude recently rose 2.49% to $72.89 per barrel and Brent was at $75.42, up 1.95% on the day.
Little is known about the severity or transmissibility of the Omicron variant. The World Health Organization’s chief scientist said on Monday that it would be “unwise” to conclude from early evidence that Omicron is a milder variant than previous ones. The WHO also said it was still too soon to say if Omicron is more transmissible than Delta.
A South African study suggested reduced risks of hospitalization and severe disease in people infected with the Omicron coronavirus variant versus the Delta one, although the authors said some of that is likely due to high population immunity.
Meanwhile, Biden warned Americans about the risks of being unvaccinated and brought military personnel to support overwhelmed hospitals.
The United States also authorized Pfizer Inc’s antiviral COVID-19 pill for at-risk people aged 12 and above.
Currency market moves were generally muted as trading slowed before the Christmas holidays. The U.S. dollar index fell 0.361%.
Reuters
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