Wall Street rides Santa Rally to record highs despite Omicron

by Jonathan Adams
Wall Street

Two years of economic devastation have not prevented Wall Street’s major indices from setting record high after record high over the course of 2021. And as a unique year for stock markets draws to a close, 2021 will officially count as another to benefit from a Santa Rally with the S&P 500 yesterday recording its 69th record high for the year.

The London Stock Exchange is in its Christmas hiatus until December 29, with the 27th and 28th of December Bank Holidays to compensate for Christmas Day and Boxing Day falling on the weekend this year. Over in the USA, however, there was no such luck for Wall Street traders with stock markets back yesterday.

s&p 500

And there was clearly some Christmas cheer left in the tank as markets drove the broad based S&P 500 and tech heavy Nasdaq to strong gains of 1.4% each. The Dow Jones wasn’t far behind with a 1% gain of its own.

The Nasdaq and Dow Jones are just shy of their own record highs but the S&P 500, considered by many as the most accurate benchmark of the American economy, has never before reached the heights it closed at yesterday. The 1.4% gain was recorded despite airline stocks stumbling again due to expected travel restrictions and general disruption expected to result from the rapid international spread of the new Omicron variant of the Covid-19 virus.

Tens of thousands of flights were cancelled or delayed in the days leading up to Christmas and over the festive period, mainly due to pilots, cabin crew and other staff testing positive for the virus and being forced into a period of quarantine. Often alongside colleagues identified as close contacts over previous days. There have also been numerous outbreaks on cruise ships.  United Airlines shed 0.6% from its value and American Airlines closed down 0.5%.

However, U.S. retail sales figures showed a sharp rise in the run up to Christmas which analysts believe bodes well for the economy going into early 2022.

Many of the major European stock markets were also open yesterday while London stayed shut. The DAX 40 added 0.5% in Frankfurt and in Paris the CAC 40 gained 0.8%. But despite the fact equities markets were in a buoyant mood, gold prices also rose, suggesting there are still concerns that markets will remain volatile. The commodity, considered a safe haven asset, inched up to $1,810.88 an ounce.

Gold’s gains can be linked to a new leap in oil prices after Brent crude gaine 3.6% yesterday. The energy crisis is almost certain to be a major feature of the global economy in 2022. Growing evidence that the new Omicron variant causing the pandemic’s latest wave is a milder disease than the previously dominant Delta has boosted expectations for stronger demand for oil over coming months than recently presumed.



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