Day Traders Diary

12/7/21

The major averages jumped for a second day, continuing their rebound from a recent rough patch, as investors grew less fearful of the potential economic impact from the new omicron coronavirus variant.The Dow Jones Industrial Average rose 492 points, or 1.4%. The S&P 500 added 95 points or 2%, just 1% away from its all-time high. The tech-heavy Nasdaq Composite led the market rally, jumping 461 points or 3%.

Tech stocks were in relief rally mode as investors shook off Covid fears and bought the recent dip, pulling the Nasdaq higher. Okta and Crowdstrike gained about 5% while Adobe added more than 3%.

Chipmakers were big winners too, with Intel leaping 3%, following news that Intel is planning to take its self-driving car unit, Mobileye, public in mid-2022. Marvell gained 7%, Nvidia rose more than 6% and Micron added 4%.

Apple shares rose 2.8% as well after a call from Morgan Stanley, which maintained its overweight rating on the stock but heightened its price target on it to $200, citing the company's commitment to developing augmented and virtual reality technology.

Other mega-cap tech stocks got a lift too, with Microsoft and Amazon rose 2%. Meta Platforms was up more than 1%.

On Friday investors rotated out of tech stocks on those Covid-related fears, and into names linked to the recovering economy. Many market strategists and analysts have called this an overreaction but Erlam urged cautious optimism.

Investors were betting that the new Covid-19 strain may cause milder illness than feared, after White House Chief Medical Advisor Dr. Anthony Fauci said Sunday that the initial data on the variant is "encouraging" but that more information is needed to fully understand it.

British drugmaker GlaxoSmithKline gave investors a confidence boost too after it said Monday that its monoclonal antibodies treatment is effective against all strains of the omicron variant, based on new data. Its shares rose 1%.

Energy stocks moved higher as oil prices rise and the outlook for global oil demand recovers. Diamondback Energy jumped 7%, Devon Energy rose 6.6% and Occidental Petroleum added 4%.

And travel-related stocks, which led the market rally Monday, continued their climb. Wynn Resorts rose more than 3%, Norwegian Cruise Line Holdings climbed 2.5%. The Invesco Dynamic Leisure and Entertainment ETF gained 2.2%.

Elsewhere, Tesla shares gained more than 4% despite news that the company had to replace cameras in three of its models. UBS said the electric carmaker will be the dominant force in the industry and raised its price target.

Megan Horneman, director of portfolio strategy at Verdence Capital Advisors, said new monetary easing measures out of the Chinese central bank helped lift the market Monday. Several Chinese tech stocks climbed higher, including Pinduoduo, which surged 13% and was the biggest gainer in the Nasdaq.

The moves follow a comeback on Wall Street in the previous session that saw the blue-chip Dow gain nearly 650 points. The S&P 500 jumped 1.1% with all 11 sectors registering gains. The Nasdaq Composite reversed higher to end the day up 0.9%.

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