Following the sell-off seen last Friday, stocks showed a strong move back to the upside during trading on Monday. The major averages all regained ground, with the tech-heavy Nasdaq leading the way higher.
The major averages gave back some ground going into the close but remained firmly positive. The Dow climbed 236.60 points or 0.7 percent to 35,135.94, the Nasdaq spiked 291.18 points or 1.9 percent to 15,782.83 and the S&P 500 jumped 60.65 points or 1.3 percent to 4,655.27.
Bargain hunting contributed to the strength on Wall Street after the steep drop seen last Friday dragged the major averages down to their lowest closing levels in at least a month.
News of the detection of a new coronavirus variant contributed to the sell-off seen in the previous session, as traders worried the pandemic would continue to weigh on the global economy.
The new Covid variant, assigned the Greek letter omicron, has been labeled a “variant of concern” by the World Health Organization.
The WHO described the global risk posed by the omicron variant as “very high” due to a high number of mutations that “may be associated with immune escape potential and higher transmissibility.”
However, the South African doctor who treated early cases of the new variant told the BBC countries could be “panicking unnecessarily” and the symptoms she had seen were “extremely mild.”
President Joe Biden also told reporters there is no need for the U.S. to reimpose lockdowns as a result of the new variant.
The U.S. has imposed travel restrictions on South Africa and several other African nations, although Biden said he doesn’t expect addition restrictions.
In U.S. economic news, the National Association of Realtors released a report showing pending home sales rebounded by much more than expected in the month of October.
NAR said its pending home sales index spiked by 7.5 percent to 125.2 in October after tumbling by 2.4 percent to a revised 116.5 in September.
Economists had expected pending home sales to increase by 1.0 percent compared to the 2.3 percent slump originally reported for the previous month.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Semiconductor stocks moved sharply higher over the course of the session, driving the Philadelphia Semiconductor Index up by 4.1 percent.
Substantial strength was also visible among software stocks, as reflected by the 2.3 percent jump by the Dow Jones U.S. Software Index.
Computer hardware stocks also turned in a strong performance on the day, resulting in a 1.8 percent advance by the NYSE Arca Computer Hardware Index.
Utilities, networking and commercial real estate stocks also saw considerable strength, while tobacco stocks were among the few groups to buck the uptrend.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index tumbled by 1.6 percent, while Hong Kong’s Hang Seng Index slumped by 1 percent.
Meanwhile, the major European markets moved to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.9 percent, the French CAC 40 Index rose by 0.5 percent and the German DAX Index edged up by 0.2 percent.
In the bond market, treasuries gave back ground after moving sharply higher in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.8 basis points to 1.530 percent.
News regarding the covid variant may continue to attract attention on Tuesday, while traders are also likely to keep an eye on a report on consumer confidence and Congressional testimony by Federal Reserve Chair Jerome Powell.
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