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Stocks of ‘Santa Claus’ increase in price? Investors look to Omicron for direction

FILE PHOTO: A street sign, Wall Street, is seen outside the New York Stock Exchange (NYSE) in New York City, New York
FILE PHOTO: A street sign, Wall Street, is seen outside the New York Stock Exchange (NYSE) in New York City, New York, U.S., January 3, 2019. REUTERS/Shannon Stapleton / File Photo

December 23, 2021

By David Randall

NEW YORK (Reuters) – Investors are closely watching the latest data on the rapidly spreading Omicron variant https://www.reuters.com/business/healthcare-pharmaceuticals/how-worried-should- we-be-about-omicron-variant -2021-12-14 for signs of how the virus could affect the US economy and earnings as markets head into the historic moment It’s a strong time of year for stocks.

Overall, the S&P 500 is down just 0.1% since the Omicron variant was identified on Nov. 24. Travel and travel stocks will be hit the most by the decline in consumer spending. has slipped more than the broader market, with Invesco Dynamic Leisure and the entertainment ETF down 1.1% over the same time period.

George Young, portfolio manager at Villere & Co. “The market is extremely reactive right now and every little news has a huge impact,” said George Young, portfolio manager at Villere & Co. Young said it plans to capitalize on any volatility caused by Omicron to add to travel and tourism-based stocks like banking company First Hawaiian Inc. The company’s shares are up 14.4% this year.

According to the World Health Organization, the Omicron variant that causes infection doubles in 1.5 to 3 days. This variant now accounts for 73% of all new cases in the United States, up from less than 1% at the beginning of the month. [L1N2T60ZU]

Questions about Omicron’s toxicity, however, made investors less pessimistic than they initially reacted when the S&P 500 fell 2.3% when the variant was detected on concerns about the state of the economy. economic stagnation.

A study out of South Africa gave hope on the severity of Omicrons and trends in COVID-19 infections on Wednesday. Vaccine makers’ shares tumbled in December as investors expected the impact of the Omicron variant to be limited based on recent data.

That bodes well for what’s known in the market as a Santa Claus rally. Historically, US stocks have risen in the last five trading days of December and the first two of January for 56 of the 75 years since 1945, according to data from CFRA Research, according to data from CFRA Research. . This year, the period begins December 27. The Santa Claus average rally has boosted the S&P 500 index by 1.3% since 1969, according to Stock Trader’s Almanac.

It’s unclear to what extent Wall Street analysts expect Omicron to affect earnings and the economy. According to Refinitiv data, S&P 500 earnings growth for 2022 was 8.3% on Friday, compared with 8.0% in early December.

Goldman Sachs cuts estimates https://www.reuters.com/markets/us/goldman-sachs-cuts-us-gdp-growth-forecast-2022-over-omicron-fears-2021-12-04 for growth US GDP from 4.2% to 3.8% due to uncertain Omicron wave impact.

Possibility Possibility Possibility

While there’s likely to be some economic impact from Omicron, US consumer spending is likely to remain strong, said Cliff Hodge, chief investment officer, Cliff Hodge, chief investment officer at Cornerstone Wealth. by Cornerstone Wealth.

He focused on any sign that Senator Joe Manchin could strike a deal that supports President Joe Biden’s signature $1.75 trillion Build Back Better https://www.reuters .com/world/us/biden-says-he-manchin-are-going -get-something-done-2021-12-21 climate and social spending bill. Manchin, who will provide one of the key votes to pass the bill in a divided Senate, said Sunday he could not support the bill in its current form. Senate Majority Leader Chuck Schumer said the Senate would vote on the bill in early January.

“We need a little bit of good news whether on the Manchin or Omicron fronts to get a rally going,” Hodge said. “We are fully invested and anticipate a small relief rally in January.”

Next week will be light on economic data, with the release of the US S&P Case-Shiller home price index on Tuesday among a number of notable data points.

Dana D’Auria, co-investment director at Envestnet PMC, said: “The lack of fresh information on the strength of the economy at a time of rising coronavirus cases could send stock markets volatile. more later this year.

“The market has been pretty good at pricing and leading from what we’re learning in terms of health,” she said.

If Omicron cases continue to spike or there are signs that economic restrictions may be re-imposed, investors are likely to rebalance shares of tech giants like Apple Inc, which has emerged as a defensive player due to its large cash flows and revenue growth driven by remote work, D’Auria said.

“At the end of the day if Omicron is really causing problems, I will be ready for a more volatile market” into the new year, she said.

(Reporting by David Randall in New York; Editing by Megan Davies and Matthew Lewis)

https://www.oann.com/santa-claus-stocks-rally-investors-look-to-omicron-for-direction/?utm_source=rss&utm_medium=rss&utm_campaign=santa-claus-stocks-rally-investors-look-to-omicron-for-direction Stocks of ‘Santa Claus’ increase in price? Investors look to Omicron for direction

Bobby Allyn

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