Wall Street’s main indexes posted solid gains for a third straight session on Thursday, with the S&P 500 marking a record-high close, as encouraging developments gave investors more ease about the economic impact of the Omicron coronavirus variant.
Stocks ended the holiday-shortened week on a positive note, lifting sentiment heading into Christmas. Gains were broad among S&P 500 sectors, led by consumer discretionary and industrials, which both rose about 1.2%.
Vaccine makers AstraZeneca Plc and Novavax Inc said their shots protected against Omicron as UK data suggested it may cause proportionally fewer hospital cases than the Delta variant, though public health experts warned the battle against COVID-19 was far from over.
The arrival of Omicron has helped ratchet up market volatility for much of the last month of 2021, which has been a strong year for equities.
“There was a lot of negative sentiment coming into the final part of the year, and investors have likely continued to see pretty strong economic growth and pretty positive developments as it relates to healthcare innovation around COVID and that is putting in a bit of a bid into equities and causing investors to look to allocate capital as they close out the year,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management.
The Dow Jones Industrial Average rose 196.67 points, or 0.55%, to 35,950.56, the S&P 500 gained 29.23 points, or 0.62%, to 4,725.79 and the Nasdaq Composite added 131.48 points, or 0.85%, to 15,653.37.
Defensive sectors, which have mostly outperformed in December, generally lagged on Thursday. The real estate sector fell 0.4%.
The S&P 500 has gained for three days, after falling in the three prior sessions.
“People are seeing the strength on Tuesday and Wednesday and all of a sudden everybody is more optimistic again,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.
For the week, the S&P 500 rose 2.3%, the Dow gained about 1.7% and the Nasdaq climbed 3.2%.
Trading volumes were expected to be thinner than usual ahead of the Christmas and New Year holidays. The stock market will be closed on Friday in observance of the Christmas holiday.
In another medical development against the pandemic, the United States authorized Merck & Co’s antiviral pill for COVID-19 for certain high-risk adult patients, a day after giving a broader go-ahead to a similar but more effective treatment from Pfizer Inc. Merck shares fell 0.6%, while Pfizer dropped 1.4%.
The number of Americans filing new claims for unemployment benefits held below pre-pandemic levels last week as the labor market tightens, while consumer spending increased solidly, putting the economy on track for a strong finish to 2021.
Tesla Inc shares rose 5.8%, gaining sharply for a second day after Chief Executive Elon Musk said on Wednesday he was “almost done” with his stock sales after selling over $15 billion worth since early November.
The S&P 500 is up about 26% so far this year. Still, the environment for equities could be changing heading into next year as the Federal Reserve is expected to begin raising interest rates in 2022.
Advancing issues outnumbered declining ones on the NYSE by a 2.40-to-1 ratio; on Nasdaq, a 2.22-to-1 ratio favored advancers.
The S&P 500 posted 35 new 52-week highs and no new lows; the Nasdaq Composite recorded 62 new highs and 80 new lows.
About 8 billion shares changed hands in U.S. exchanges, compared with the 11.8 billion daily average over the last 20 sessions.
(Reporting by Lewis Krauskopf in New York, Medha Singh and Bansari Mayur Kamdar in Bengaluru; Editing by Uttaresh.V and Matthew Lewis)
Pandemic darlings face the boot as investors eye return to normal life
Stay-at-home market darling Netflix slumped on Friday, joining a broad decline in shares of other pandemic favourites this week as investors priced in expectations for a return to normal life with more countries gradually relaxing COVID restrictions.
The selloff, which began after Netflix and Peloton posted disappointing quarterly earnings, spread to the wider stay-at-home sector as analysts judged the new Omicron coronavirus variant will not deliver the same economic headwinds seen in the first phase of the pandemic in 2020.
“This a confirmation that the economy is gradually moving towards some sort of normalisation,” said Andrea Cicione, head of strategy at TS Lombard.
France will ease work-from-home rules from early February and allow nightclubs to reopen two weeks later, while Britain’s business minister said people should get back to the office to benefit from in-person collaboration.
“With a return to the office and travel lanes opening, darlings of the WFH (work from home) thematic are reflecting the growing reality that the world is moving slowly but with certainty towards a new normalcy,” said Justin Tang, head of Asian research at United First Partners in Singapore.
Netflix tumbled nearly 25% after it forecast new subscriber growth in the first quarter would be less than half of analysts’ predictions.
The stock, a component of the elite FAANG group, was on track for its worst day in nearly nine-and-a-half years following rare rating downgrades from Wall Street analysts.
“It is hard to have confidence that Netflix will return to the historical +26.5 million net subscriber add run rate post the 2022 slowdown,” MoffettNathanson analyst Michael Nathanson said.
“The decay rate on streaming content is incredibly rapid. ‘Squid Game?’ That’s so last quarter. ‘The Witcher?’ Done on New Year’s Eve!”
Exercise bike maker Peloton lost nearly a quarter of its value on Thursday, leading at least nine brokerages to cut their price target on the stock.
The selloff erased nearly $2.5 billion from its market value after its CEO said the company was reviewing the size of its workforce and “resetting” production levels, though it denied the company was temporarily halting production.
Peloton’s shares were up nearly 5% on Friday morning, bouncing back somewhat from a 23.9% drop on Thursday, its biggest one-day percentage decline since Nov. 5.
Both companies were part of a group, along with others such as Zoom and Docusign whose shares soared in 2020, and in some cases 2021 as well, as people around the world were forced to stay at home in the face of the coronavirus.
However, thanks to vaccine rollouts and the spread of the less severe Omicron strain of COVID-19, life is returning to normal in many countries, leaving companies like Netflix and Peloton struggling to sustain high sales figures.
According to data from S3 Partners, short-sellers doubled their profits by betting against Peloton in 2021, the third best returning U.S. short.
Direxion’s Work from Home ETF has fallen more than 9% in first three weeks of the year, compared to a 6% drop in the fall of the broader U.S. stock market. Blackrock‘s virtual work and life multisector ETF has weakened more than 8% this year.
In Europe, lockdown winners are also going through a rough patch as rising bond yields pressurise growth and tech stocks.
Online British supermarket group Ocado, Germany’s meal-kit delivery firm HelloFresh and food delivery company Delivery Hero which emerged as European stay-at-home champions in the early days of the pandemic have underperformed the pan-European STOXX 600 so far in 2022.
(Reporting by Alun John and Julien Ponthus; Additional reporting by Nivedita Balu, Anisha Sircar and Chuck Mikolajczak; Editing by Saikat Chatterjee, Alison Williams and Saumyadeb Chakrabarty)
Bitcoin falls 9.3% to $36,955
Bitcoin dropped 9.28% to $36,955.03 at 22:02 GMT on Friday, losing $3,781.02 from its previous close.
Bitcoin, the world’s biggest and best-known cryptocurrency, is up 2.4% from the year’s low of $36,146.42.
Ether, the coin linked to the ethereum blockchain network, dropped 12.27% to $2,631.35 on Friday, losing $368.18 from its previous close.
(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Sriraj Kalluvila)
Oil, gas investment forecast to rise 22% in Canada – Investment Executive
It’s positive news for an industry that has now essentially recovered to its pre-pandemic levels, after a disastrous 2020 that saw oil prices collapse due to the impact of Covid-19 on global demand.
But CAPP president Tim McMillan pointed out that in spite of the fact that oil prices are at seven-year highs and companies are recording record cash flows, capital investment remains well below what it was during the industry’s boom years. In 2014, for example, capital investment in the Canadian oilpatch hit an all-time record high of $81 billion, capturing 10% per cent of total global upstream natural gas and oil investment.
“Today we’re at $32 billion, and we’re only capturing about six% of global investment,” McMillan said. “We’ve lost ground to other oil and gas producers, which I think is problematic for a lot of reasons . . . and it leaves billions of dollars of investment that is going somewhere else, and not to Canada.”
Investment in conventional oil and natural gas is forecast at $21.2 billion in 2022, according to CAPP, while growth in oilsands investment is expected to increase 33% to $11.6 billion this year.
Alberta is expected to lead all provinces in overall oil and gas capital spending, with upstream investment expected to increase 24% to $24.5 billion in 2022. Over 80% of the industry’s new capital spending this year will be focused in Alberta, representing an additional $4.8 billion of investment into the province compared with 2021, according to CAPP.
While the 2022 forecast numbers are good news for the Canadian economy, McMillan said, it’s a problem that companies aren’t willing to invest in this country’s industry at the level they once did.
He said investors have been put off by Canada’s record of cancelled pipeline projects, regulatory hurdles and negative government policy signals, and many now see Canada as a “difficult place to invest.”
However, Rory Johnston, managing director and market economist at Toronto-based Price Street Inc., said laying the decline in the industry’s capital spending at the feet of the federal government is overly simplistic.
He added while current “rip-roaring, amazing” cash flows and a period of sustained high oil prices will certainly give some producers the appetite to invest this year, Johnston said, it will likely be on a project-by-project basis and certainly on a smaller scale than the major oilsands expansions of a decade ago.
“You have global macro trends across the entire industry that have begun to favour smaller, fast-cycle investment projects – and most oilsands projects are literally the polar opposite of that,” he said.
One reason capital spending isn’t likely to return to boom time levels is because companies have become much more cost-efficient after surviving a string of lean years. And that’s not a bad thing, Johnston said.
“The decade of capex boom out west was tremendously beneficial for Canada and Albertans, but it also caused tremendous cost inflation,” he said.
“While what we’re seeing right now is not as construction-heavy and not as employment-heavy – and those are two very, very large downsides – the upside is that you’re much more competitive in a much more competitive oil market,” Johnston said.
In a report released this week, the International Energy Agency (IEA) hiked its oil demand growth forecast for the coming year by 200,000 barrels a day, to 3.3 million barrels a day.
According to the IEA, global oil demand will exceed pre-pandemic levels this year due to growing Covid-19 immunization rates and the fact that the new Omicron variant hasn’t proved severe enough to force a return to strict lockdown measures.
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