Dow industrials gain for second day Wednesday amid upbeat data ahead of Christmas

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U.S. stock indexes saw further gains late-morning Wednesday, with benchmarks looking to add to Tuesday’s strong rebound in what has been a volatile holiday-shortened week.

Uncertainty about the economic impact of the omicron variant of the coronavirus has been at the center of the market’s recent gyrations, with upbeat data on Wednesday helping to support some further buying.

How are stock benchmarks trading?
  • The S&P 500 index SPX, +0.72% traded 32 points, or 0.7%, higher at 4,680.
  • The Dow Jones Industrial Average DJIA, +0.45% rose 171 points, or 0.5%, to reach 35,664.
  • The Nasdaq Composite Index COMP, +0.91% climbed 115 points, or 0.7%, to reach 15,455.

On Tuesday, the Dow industrials surged 560.54 points, or 1.6%, to end at 35,492.70, the best daily percentage gain since Dec. 6, according to Dow Jones Market Data. The S&P 500 advanced 1.8% to 4,649.23, and the Nasdaq Composite climbed 2.4% to 15,341.09.

Read: Why growth and dividend stocks will be hot items for 2022, along with these super-productive companies

What’s driving the markets?

Markets were drifting higher but volatility has been the name of the game this week, as Wall Street assesses the landscape of the market in the final few sessions of 2021. Many financial exchanges will be closed on Friday in observance of Christmas.

After a tepid to weak opening, all 11 sectors of the S&P 500 have turned positive, at last check Wednesday late-morning, with gains led by consumer discretionary SP500.25, +1.59% and communication services SP500.50, +0.78%.

Economic data showed U.S. third-quarter gross domestic product revised to growth of 2.3% from a previous 2.1%.

Meanwhile, a closely watched consumer confidence survey came in stronger than expected, rising to 115.8 in December from a reading of 111.9 in the prior month, The Conference Board said Wednesday. Economists polled by The Wall Street Journal had forecast a slight rebound to 111. It’s not clear if that reading factors the impact of the spread of omicron, which was first identified in late November and has gained steam since.

“This means that the impact on confidence from the rapid spread of the Omicron variant has not been fully reflected in the survey,” wrote Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, in a Wednesday research note.

“Consumers were a bit less pessimistic about inflation, but the 12-month inflation expectations rate remained very high at 6.9%, down from 7.3% in November,” the Oxford Economics economist wrote. “Consumers’ outlook for the labor market and income remained upbeat, but less ebullient than in November,” she said.  

Separately, a report on existing-home sales rose 1.9% to a seasonally adjusted annual rate of 6.46 million in November, the National Association of Realtors said Wednesday. That is the third straight monthly gain. Compared with November 2020, home sales were down 2%. Economists polled by The Wall Street Journal had expected an increase to 6.5 million units.

Investors took heart Tuesday from comments by President Joe Biden, who outlined out a plan to tackle omicron, with 500 million free testing kits and a promise there would be no March 2020-style lockdowns.

Biden’s speech helped to cement Tuesday’s rally, which marked the best daily percentage gain for the S&P 500 and Nasdaq Composite since Dec. 7, and gains that more than made up for Monday’s selloff.

Hope that Biden’s Build Back Better, his $2 signature social-spending package, wasn’t entirely dead, also has helped to provide some support for optimism among those who feared that economic expansion without the legislation would be weak.

“Stock traders believe the new strain’s consequences will be short-lived and less damaging to the American economy. This is because corporate balance sheets are on solid footing, and investors believe that the United States will be able to navigate through this period unharmed,” said Naeem Aslam, chief market analyst at AvaTrade, in a note to clients.

Meanwhile, medical experts in South Africa have said a noticeable recent drop in new COVID-19 cases could signal the omicron-driven surge has passed its peak. That, of course, doesn’t mean waves in other countries will follow that pattern.

And the holiday season remains complicated by the new variant that is causing case spikes in the U.S., Europe and elsewhere. Dr. David Powell, physician and medical adviser to the International Air Transport Association, warned that the new variant increases the risk of catching COVID-19 during a flight by two or three times, in an interview with Bloomberg that published late Tuesday.

COVID jitters also caused Twitter TWTR, -0.34%, Amazon AMZN, +0.80% and Facebook parent Meta FB, -0.48% to cancel appearances at the CES 2022 in Las Vegas in January.

Read: Canceling your Christmas travel plans because of COVID-19? How to avoid wasting time—and money

Read: API data show U.S. crude-oil inventories down 3.7 million barrels last week: sources

Which companies are in focus?
How are other assets trading?
  • The yield on the 10-year U.S. Treasury note  TMUBMUSD10Y, 1.458%  was headed lower to 1.45%. Yields and debt prices move opposite each other.
  • The ICE U.S. Dollar Index  DXY, -0.37% a measure of the currency against a basket of six major rivals, was about 0.3% lower.
  • Oil futures rose, with the U.S. benchmark  CL00, +0.89%  up 0.2% to $71.24 a barrel, while gold futures GC00, +0.48% rose 0.3% to $1,793.30 an ounce.
  • Bitcoin  BTCUSD, -0.13% fell 0.4% to $48,698
  • The Stoxx Europe 600 index  SXXP, +0.92% rose 0.3% and London’s FTSE 100  UKX, +0.61%  was trading 0.1% higher.
  • The Shanghai Composite  SHCOMP, -0.07% rose 0.9%, while the Hang Seng Index HSI, +0.57%  gained 0.5% and Japan’s Nikkei 225  NIK, +0.16% rose 0.1%.