Day Traders Diary

12/21/21

The major averages rebounded sharply Tuesday following three days of losses amid fears about the fast-spreading Covid omicron variant. The Dow Jones Industrial Average jumped 560 points, helped by gains in Nike and Boeing. The S&P 500 rose 81 points or 1.78% while the technology-focused Nasdaq Composite added 360 points or 2.2%. The small-cap benchmark Russell 2000 was up about 2.7%.

Reopening plays, like airlines, cruise lines and entertainment stocks, saw some relief buying on Tuesday. Delta Air Lines rose 6.2%, United Airlines gained 7% and Carnival Corp. added 9%. Las Vegas Sands was up more than 8%. Caesars Entertainment added 8.4%. Boeing rose 5% and Booking Holdings popped 6%.

President Joe Biden said in a Tuesday address that people with booster shots are "highly protected," urging Americans to get their extra doses. The president reiterated that the U.S. is not going back to March 2020 at the height of the initial outbreak where the country went into a forced lockdown.

Biden said his administration will deploy 1,000 medical personnel from the military to back up hospitals if they face a wave of omicron patients in January and February. The White House is also purchasing 500 million at-home Covid tests that Americans can order for free through a website starting next year.

Stocks are coming back from a three-day losing streak spurred by the omicron surge that accounted for 73% of new infections in the U.S. last week, federal health officials said Monday. The S&P 500 notched its worst three-day stretch since September on Monday.

Micron shares surged nearly 8% after the memory-chip maker posted much better than expected earnings for the prior quarter and gave bullish guidance. NXP Semiconductors and Advanced Micro Devices gained 1.8% each.

Nike shares jumped more than 6% after the sneaker maker reported quarterly earnings and sales that exceeded analysts' expectations, despite ongoing supply chain pressures. Other retailers like Gap, Dick's Sporting Goods and Macy's also gained.

The 10-year Treasury yield rebounded to near 1.5% after concerns regarding omicron slowing the recovery dragged it down as low as 1.36% late last week. Oil bounced 2.5% back to above $70 a barrel, spurring a rebound in energy names like Devon Energy, ConocoPhillps and Chevron.

The omicron surge has kept investors on edge with the variant now found in at least 43 U.S. states and 90 countries. Officials with the World Health Organization said omicron is more contagious than any previous variant of Covid-19.

The blue-chip Dow dropped more than 400 points for its third straight declining session on Monday. The S&P 500 and the Nasdaq Composite both declined more than 1% Monday. The Dow lost nearly 1,000 points over the previous three sessions.

Investors also assessed the prospects for Biden's economic agenda. The Senate will vote on Biden's sweeping social safety net and climate policy bill in January, despite Democratic Sen. Joe Manchin's opposition to it. It is unclear if Democrats will try to pass a smaller bill that includes only parts of the full package.

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