By Yasin Ebrahim
Investing.com – The S&P 500 climbed Tuesday, as investors piled into energy and tech stocks following the recent Omicron-fuelled selloff, while a surge in Nike and Micron also bolstered sentiment on big tech.
The S&P 500 rose 1.8%, the Dow Jones Industrial Average gained 1.6%, or 560 points, the Nasdaq climbed 2.4%.
The Centers for Disease Control and Prevention reported that the Omicron variant is now the dominant strain of Covid in the U.S., representing 73% of cases compared with just 13% a week earlier.
Against the backdrop of the ongoing climb in Covid-19 cases, and potential for further restrictions to curb the spread of the new variant, investors piled into beaten down sectors such as financials as U.S. treasury yields rebounded.
Energy also rebounded from its recent malaise, up more than 2% as oil prices advanced even as the threat of the Omicron impact on energy demand persisted.
On the earnings front, Nike and Micron were in the spotlight after delivering better-than-expected quarterly results.
Nike (NYSE:NKE) earnings of 83 cents per share topped Wall Street estimates as strong growth in the North America offset weakness in its key China market. Its share rose more than 6%.
“Overall, we remain bullish on the name, as the brand remains extremely strong, they continue to benefit from the shift to Digital, and the supply chain issues appear to be closer to the end than the beginning,” Wedbush said in a note.
Micron Technology (NASDAQ:MU) also beat consensus estimates and issued strong guidance, driven by ongoing demand for memory and easing supply chain disruptions. Its shares gained more than 10%.
Also helping chip stocks, Nvidia (NASDAQ:NVDA) rose more than 4% after the chipmaker was flagged as “top pick” by UBS, citing a “wide moat.”
The move higher in chip stocks coincided with a rebound in big tech once, led by Meta, formerly known as Facebook (NASDAQ:FB), which rose nearly 3%.
Microsoft (NASDAQ:MSFT), Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and Amazon.com (NASDAQ:AMZN) ended the day up more than 1%.
A day after negotiations around the Biden administration's ‘Build Back Better’ spending package were brought to halt as Senator Joe Machin rejected the package, investors believe the hit to economic growth will be manageable.
The failure of the package in its current form will take “a bite out of GDP and spending growth in early 2022, but the overall consequences should be manageable,”Morgan Stanley said.
President Biden on Tuesday said that he and Manchin would "get something done" on the Build Back Better Act.
The move higher in stocks comes just as the traditional so-called Santa Rally, which typically lasts until into the first few days of the new year, is set to kick off.