S&P 500 struggles for direction, Dow holds gain as U.S. stocks trade mixed Tuesday afternoon

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By Christine Idzelis and Mark DeCambre

S&P 500 sets intraday record at 4,807.02, before turning lower

U.S. stock indexes mostly edged lower Tuesday afternoon, after a four day rally, as some investors looked toward 2022 with optimism, despite record COVID-19 cases resulting from the spread of the omicron variant.

How are stock indexes trading?

On Monday, the S&P 500 rose 65.40 points, or 1.4%, to 4,791.19, its 69th record finish for 2021. The Dow climbed 351.82 points, or 1%, to end at 36,302.38, its fourth-highest close in history. The Nasdaq Composite climbed 217.89 points, or 1.4%, to close at 15,871.26.

What’s driving markets?

Investors are betting that the spread of the omicron variant of the coronavirus won’t capsize economic growth, even if expectations for another powerful run-up in stocks seems doubtful following outsize gains in 2021.

The market is expecting omicron to be “pretty mild” despite being highly contagious, anticipating that the variant is unlikely to lead to “serious lockdowns” in the U.S., said Scott Wren, senior global market strategist at Wells Fargo Investment Institute, in a phone interview Tuesday. Meanwhile, holiday-shopping sales looked “pretty good,” giving the stock market some momentum in the final stretch of 2021.

On Monday, the market set off on its best so-called Santa Claus Rally, which tends to show up for U.S. stocks in the final week of December and first two trading sessions of January, in about two decades.

“It seems that last week’s reports confirming that the omicron coronavirus variant is not as deadly as prior strains, kept market participants willing to increase their exposure this week as well,” said Charalambos Pissouros, head of research at JFD Group.

While the omicron variant spreads around the globe, particularly wreaking havoc on holiday travel due to rising cases among airline staff in particular, investors have taken heart from news Monday that the U.S. Centers for Disease Control and Prevention cut its recommended COVID-19 isolation time to five days, from 10, if affected individuals are symptom-free.

Still, Apple (AAPL) said it would temporarily close 11 New York City stores as a precaution against rising cases. And major cities around the world, including New York City, are paring down New Year’s Eve celebrations as a way of combating the virus’ spread. Apple’s shares were down 0.6% Tuesday afternoon.

Read:Big Tech heads for ‘a year of thousands of tiny tech papercuts,’ but what antitrust efforts could make them bleed?

In a light week for U.S. economic data, the S&P CoreLogic Case-Shiller 20-city price index posted an 18.4% year-over-year gain in October, down from 19.1% the previous month. That measure of U.S. home prices, released Tuesday, marked the third consecutive month showing annual appreciation occurred at a slower pace.

“It’s good for the housing market if price appreciation slows because then more people can afford housing,” said Wren. “First-time home buyers are having a tough time affording these prices.”

Meanwhile, China Evergrande Group(3333.HK), the heavily indebted real-estate developer, said on Tuesday that construction work had resumed at more than 90% of its stalled residential projects.

Wren sees no major headwinds for the U.S. stock market for the remainder of 2021.

“For these next few days there’s no reason to think the market’s going to have any kind of meaningful correction unless there would be some complete surprise,” said Wren. Wells Fargo Investment Institute forecasts that the S&P 500 index will rise to 5,200 in 2022, based partly on expectations for good growth in company earnings, he said.

Which companies are in focus?

How are other assets faring?

–Barbara Kollmeyer contributed to this article.

-Christine Idzelis

 

(END) Dow Jones Newswires

12-28-21 1515ET

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