Volatility is what defines the stock market movements. While the stock prices reacted sharply on the news of the new Omicron coronavirus variant, the recent reaction shows how the markets are discounting the fears arising from it.
After the recent remarks by Jerome Powell regarding inflation and an early tapering signal, that left the financial markets shocked, the market yesterday rebounded sharply. US equities closed higher as investors grew less fearful of the potential economic impact from the new Omicron coronavirus variant and probably the likely impact of the taper effect in the months ahead.
All eyes will be on the Fed ahead of next week’s FOMC meeting when the central bank is widely expected to accelerate taper.
The Dow Jones Industrial Average or Dow 30 was up by nearly 492 points, or 1.4% and settled at about 35,719.43 at the close. Dow 30 is up by almost 17 per cent YTD.
The S&P 500 had its biggest rally since March to wipe out losses from the past week. The S&P 500 added 95.08 points and was up by 2.07% settling at 4,686.75. S&P 500 is up by almost 25 per cent YTD.
The Nasdaq 100 leading the market rally went up by 479.50 points jumping 3.03% to 16,325.66. Nasdaq 100 is up by almost 27 per cent YTD.
Russell 2000 representing the small caps stocks in the US market was up by nearly 2.28% and is up by almost 14 per cent YTD.
According to Factset, Tech led amid further strength in shares of Apple and good gains in growth software. Consumer discretionary was broadly higher as well. Communication services saw some drag from telecom and Comcast Corporation (CMCSA). Consumer staples trailed, with grocers among the weak spots.
Rather than predicting what’s in store in 2022 for the investors, a better way is to be diversified across the stocks among the Nasdaq 100, S&P 500 and Dow 30 indices. Diversification across sectors and economies help mitigate risk and avoid any bad surprises to the portfolio.