U.S. Stocks Enter "Santa Rally" as Omicron Concerns Ease; Inflation Data in Sight
Wall Street appears poised for a classic "Santa Claus" rally on Thursday, with stocks generally rising over the last five business days during Christmas and the first two stock markets of the following year.
U.S. stocks rose Thursday, opening up the possibility of a three-day rally ahead of the Christmas vacation, as investors look past Omicron risks after a series of data suggesting the rapidly expanding variant has milder symptoms than its predecessors.
The Food and Drug Administration's (FDA) decision to approve Pfizers (PFE) Get Pfizer Inc.'s report on the antiviral treatment Covid, which has also proven highly effective against Omicron, also boosts investor confidence that global growth will not be hampered by the virus doubling its infection rate every one to three days.
Novavax (NVAX) Get report Novavax, Inc. The report also released promising data from a late-stage study of its vaccine candidate Covid that included the potent Omicron potency, and the FDA may also approve Merck (HRC) Co.'s (HRC) antiviral pill, Inc. reports that added another arrow to the U.S. government's earthquake as it struggles with the impact of rising infections on the world's largest economy.
A stronger-than-expected consumer confidence reading yesterday, along with ongoing bets that President Joe Biden's $1.75 trillion "Build Back Better" spending bill could find support despite Senator Joe Manchin's refusal, also comes on one of the last trading days of 2021.
Faster-than-expected inflation data in the form of the Fed's preferred gauge, the core PCE index, comes in at 4.7%.
Meanwhile, weekly jobless claims held steady at 205,000 from the period ending Dec. 18, while the four-week average of jobless claims rose to 206,250.
On Wall Street, futures linked to the Dow Jones Industrial Average rose 85 points at the open, while contracts linked to the S&P 500 closed up eight points, poised for a rally. Stocks, dubbed "Santa Claus," tend to rise during the last five business days of Christmas and the first two days of the following year.
The Nasdaq Composite will open slightly higher, albeit on light volume before the market opens, with futures showing a 10-point gain while 10-year Treasury yields fall and hold at 1.462% in overnight activity.
Shares of U.S.-listed Chinese companies will also be in the spotlight Thursday after Tencent Holdings (TCHEY) lost $16.4 billion in shares of e-commerce giant JD.com (JD) - Get JD.com Inc. amid Beijing's expansion in the technology industry.
JD.com's U.S.-listed shares are down 8.5% before market hours to open at $67.51 per share. Tencent, meanwhile, saw a 4.24% rise in its Hong Kong trading.
In addition, Intel Corp. (INTC) - Intel Corp. posted a sharp drop in pre-market trading after the chipmaker formally apologized to China for its stance on buying products from the Uyghur region in Xinjiang.
Earlier this month, Intel told its suppliers not to source materials from the region, where the U.S. State Department said Uighur Muslims are often forced to work in camps, a claim Beijing repeatedly denies. The directive sparked a backlash on social media and raised the possibility of retaliation by the Chinese government.
Intel shares fell 0.1% in pre-market trading to an opening price of $50.93 per share. Overseas, Europe's Stoxx 600 index was up 0.6 percent at midday in Frankfurt, while the non-Japan MSCI Asia Pacific index was up 0.85 percent at the end of the session and the Nikkei 225 index in Tokyo closed up 0.83 percent at 28,798.37 points.
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