S&P 500, Dow eye higher open after Omicron-led selloff

Traders work on the floor of the New York Stock Exchange during the opening bell, March 10, 2020 in New York. — AFP pic
Traders work on the floor of the New York Stock Exchange during the opening bell, March 10, 2020 in New York. — AFP pic

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NEW YORK, Dec 2 — The Dow and the S&P 500 were set to rise today, led by gains in planemaker Boeing and travel stocks, although increasing cases of the new Omicron coronavirus variant across the world continued to drive volatility in markets.

Boeing Co jumped 5.3 per cent in premarket trading after China’s aviation authority issued an airworthiness directive on the 737 MAX that will help pave the way for the model’s return to service in China after more than two and a half years.

Dragging down Nasdaq futures, Apple Inc fell 3.1 per cent and its suppliers Qualcomm, Skyworks and Qorvo slipped between 2.5 per cent and 3.2 per cent after Bloomberg reported about slowing demand for Apple’s iPhone 13.

The S&P 500 and the Nasdaq closed below their 50-day moving average on Wednesday, while the Dow breached its 200-day moving average for the first time since July 2020 on growing investor angst about the latest coronavirus variant and the Federal Reserve’s hawkish comments.

“It is a bit of a ‘buy the dip’ environment... uncertainty will persist over the next week or so as scientists do more studies over the new variant,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

“I still think investors want to focus on equities, they just need to be given a reason to do so.”

Wall Street whipsawed this week as investors appeared to scramble for bargains after every drawdown. However, the three indexes are tracking sharp weekly losses, with the Dow on pace for its fourth straight fall.

The United States and Germany joined countries around the globe planning stricter Covid-19 restrictions as the Omicron variant rattled markets, fearful it could choke a tentative economic recovery from the pandemic.

Market participants are already worried about supply chain logjams and global central banks returning faster to pre-pandemic monetary policies to tackle surging price pressures.

The CBOE volatility index, also known as Wall Street’s fear gauge, was last trading at 29.60 points, a day after hitting its highest level since February.

At 08.42am ET, Dow e-minis were up 216 points, or 0.64 per cent, S&P 500 e-minis were up 10.5 points, or 0.23 per cent, and Nasdaq 100 e-minis were down 56.25 points, or 0.35 per cent.

Meanwhile, lawmakers reached an agreement to fund the US government until February 18 as they scramble to avoid a partial government shutdown this weekend.

Stellar earnings reports and strong economic growth have powered US stocks to a series of record highs in November, with the S&P 500 climbing 20.1 per cent so far this year.

A Reuters poll of equity analysts said a correction was likely in the next six months, with the benchmark expected to gain 7.5 per cent between now and end-2022 to finish at 4,910.

Among other stocks, Delta Air Lines rose 1.8 per cent, while cruise operators Carnival Corp and Norwegian Cruise Line gained about 2 per cent each to recoup some of Wednesday’s losses.

Oil majors Exxon Mobil and Chevron Corp rose 1.0 per cent and 1.5 per cent, respectively, tracking oil prices. Bank of America was the biggest gainer among its peers, up 1.1 per cent. — Reuters

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