Stocks Rally, Bonds Drop as Covid Jitters Abate: Markets Wrap

Stocks climbed and bonds fell as a relative sense of calm returned to global markets, with investors reassessing their worst-case scenarios for the omicron coronavirus strain.

The S&P 500 erased its November losses, led by gains in energy, technology and retail shares. Vaccine makers rose after BioNTech SE, Moderna Inc. and Johnson & Johnson said they are working to adapt their Covid-19 shots to address the latest strain, with the German partner of Pfizer Inc. noting it could have a new version ready within 100 days if necessary. Airlines and cruise operators rebounded from Friday’s selloff. Twitter Inc. jumped on a news report that Chief Executive Officer Jack Dorsey is stepping down.

Governments across the globe stepped up restrictions as the World Health Organization warned the new variant of the virus could fuel a fresh surge in infections. Scientists in South Africa, where omicron was first detected, said it appears to spread more easily, but existing vaccines are still likely to protect against severe illness. Pershing Square Capital Management founder Bill Ackman said it will be bullish for equity markets if symptoms caused by the new strain turn out to be mild to moderate.

“Investors are evidently making an assumption today that omicron may not be as bad as had been feared on Friday, and that vaccines may still prove effective,” wrote Fawad Razaqzada, an analyst with ThinkMarkets. “It will take some time — possibly a couple of weeks at least — to understand this variant better. So, what might happen going forward is that we will see elevated levels of volatility as investors continually take profit and buy the dips here and there, until there’s more clarity on the virus front.”

President Joe Biden plans to meet with the chiefs of Walmart Inc., CVS Health Corp. and other retailers as part of his efforts to tackle supply chain bottlenecks and inflation. The session will include executives from the grocery, electronics and pharmacy sectors to make sure shelves are stocked during the busy holiday season, according to a White House official.

These are some key events to watch this week:

• Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen in the U.S. Senate, Tuesday. Wednesday they front the House Financial Services Committee.
• Euro zone CPI, Tuesday
• China PMIs, Tuesday
• Euro zone manufacturing PMIs, Wednesday
• China Caixin manufacturing PMI, Wednesday
• OPEC, allies may re-evaluate plans for reviving oil supplies, Thursday
• San Francisco Fed’s Mary Daly and Richmond Fed’s Tom Barkin discuss the labor market and inflationary pressures at a virtual event, Thursday
• U.S. November jobs report Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 1% as of 9:44 a.m. New York time
• The Nasdaq 100 rose 1.5%
• The Dow Jones Industrial Average rose 0.6%
• The Stoxx Europe 600 rose 1.2%
• The MSCI World index rose 0.6%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.4% to $1.1271
• The British pound fell 0.2% to $1.3309
• The Japanese yen fell 0.4% to 113.82 per dollar

Bonds

• The yield on 10-year Treasuries advanced nine basis points to 1.56%
• Germany’s 10-year yield advanced four basis points to -0.30%
• Britain’s 10-year yield advanced five basis points to 0.87%

Commodities

• West Texas Intermediate crude rose 6.1% to $72.34 a barrel
• Gold futures were little changed

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