The Dow Jones Industrial average and S&P 500 hit new records as investors snapped up equities for a second day to start 2022.
The Dow rose 338 points, or about 0.9%, and hit an intraday record on Tuesday. The S&P 500 also reached an intraday record, adding 0.2%. The Nasdaq Composite shed 1.3%, dragged down by losses in Moderna and Tesla.
Investors this week have been betting the economy could overcome the latest surge in Covid cases and riding momentum from what was a stellar 2021 for the markets.
Energy and economic recovery stocks were among the early gainers, despite the U.S. reporting omicron cases rising above 1 million Monday. Halliburton shares jumped 5% as crude prices rose and Morgan Stanley upgraded the oil services company.
Bond yields jumped for a second day as investors digested growing evidence that the omicron variant of Covid-19 may be less of a material drag on global growth. Bank stocks, which got a lift from the rise in yields Monday, extended their gains Tuesday. JPMorgan, Goldman Sachs, Bank of America, and others rose about 2%. Wells Fargo gained 3%.
Elsewhere, cruise operators continued their rebound, with shares of Carnival Corp and Norwegian Cruise rising roughly 2%. Airline stocks were also higher as part of the reopening trade. American and United Airlines rose about 2%.
“We believe there is further upside for stocks, despite a strong run so far,” wrote JPMorgan equity strategists led by Mislav Matejka in a note Tuesday. “The new variant is proving to be milder than the prior ones.”
“We continue to see gains for earnings, and believe that consensus projections for 2022 will again prove too low,” they added.
Shares of Ford Motor rose more than 8% after the company opened orders this week for its F-150 Lightning electric pickup truck, which it had previously shut down due to an overwhelming response. The company also announced plans to nearly double its production plan to 150,000 annually.
Tesla shares fell about 3% after jumping 13% on Monday.
Moderna shares fell 3% after the U.S. Centers for Disease Control and Prevention shortened the recommended waiting period for people who completed their primary Covid-19 vaccination series with Pfizer’s shots.
The major averages rose Monday to start the new year, with the Dow and S&P 500 notching record closing highs. The Nasdaq also gained more than 1%, led by Tesla’s jump and Apple climbing. The iPhone maker on Monday became the first company to reach a market cap of $3 trillion.
“Optimism on global economic growth and earnings momentum reviving since mid-December continued to grow in the first day of the New Year,” said Jim Paulsen, Leuthold Group chief investment strategist. “Those stocks most closely tied to better economic growth did the best [Monday] but were joined by new-era sectors including technology and communications.”
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