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Stocks rebound after Omicron plunge

<i>Richard Drew/AP</i><br/>Specialist Meric Greenbaum
Richard Drew/AP
Specialist Meric Greenbaum

By Anneken Tappe, CNN Business

Stocks made a comeback Monday, bouncing back from the steep selloff at the end of last week, when investors feared the Omicron Covid variant could disrupt the global economic rebound.

Reports of the new Omicron variant of the coronavirus brought back memories of last summer when the fast-spreading Delta variant put a dent in the recovery and consumer confidence. This spooked investors on a traditionally quiet day in the market following Thanksgiving, leading to one of the worst days for stocks this year.

The Dow logged its worst day since October 2020, while the S&P 500 had its worst performance since February. The Nasdaq Composite recorded its steepest fall since September.

But just as the market quickly bounced back from its Delta fears, history appears to be repeating itself: Investors are taking a breath and sensing a buying opportunity.

Stocks opened sharply higher and booked a really good day in spite of a brief mid-morning dip.

The Dow closed up 0.7%, or 237 points, logging its best day since mid-October. Similarly, the S&P also had its best session since the middle of last month, closing up 1.3%.

The Nasdaq outperformed them both, closing up 1.9% on its best day since May.

Other asset classes that were battered Friday — notably oil and cryptocurrencies — also recovered.

US oil prices settled up 2.6%, or nearly $2, at $69.95 per barrel, having given back some of their earlier advances. Although that doesn’t totally make up for Friday’s drop, it takes back a some of the losses.

Bitcoin was up nearly 6% around the time of the stock market close.

Treasury bond yields, which fell Friday as investors were gunning for safety, reversed course and rose Monday. The 10-year US government bond yielded 1.52% when the New York Stock Exchange closed.

“Investors are trying to make sense of the latest Omicron Covid strain, but at this point more seems to be unknown than known,” said analysts at Bespoke Investments. “Clouding things even more, we’re unlikely to have definitive answers in the immediate future.”

But if the market hates one thing, it’s uncertainty.

Even as investors anxiously await details on the Omicron variant and its potential to disrupt the recovery, they should remember that ” the economy should enter 2022 with a tailwind of strong wage growth, falling unemployment and huge gains in asset prices,” said David Kelly, chief global strategist at JPMorgan Funds.

“This week’s economic reports, and particularly Friday’s jobs report, should provide further evidence that the economy is gathering momentum in the fourth quarter,” he added.

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