After the worst three-day selloff since September, the benchmark S&P 500 is essentially flat for December. The Nasdaq, meanwhile, is off 3.6% this month, leading tech bulls to wonder whether there will even be a Santa Claus rally this year.
On Tuesday, though, a glimmer of risk-on optimism returned to global markets. The reason? It mainly comes down to the two Joes and the Big O.
The latter, of course, is the Omicron variant, which now accounts for nearly three out of every four new infections in the United States, and is triggering a wave of lockdowns across Europe, and the cancellation of marquee events like the World Economic Forum’s annual gabfest in Davos, Switzerland.
On Tuesday, economists at Bloomberg calculated the highly infectious variant will halve global growth this quarter, putting the brakes on an otherwise impressive rebound.
But investors were reading good news in the mixed data out of South Africa, an early Omicron hotspot. There, daily cases fell precipitously even as hospitalizations and deaths ticked up.
Another factor lifting investor spirits: Moderna’s COVID-19 booster delivered promising results when tested against Omicron.
That, and a big profit-beat posted by Nike after the bell on Monday is giving investors something to cheer. The stock boards in Asia and Europe were a shade of Christmas green on Tuesday. In Europe, every sector but one opened in positive territory with tech, finance, and basic resources leading the way higher.
U.S. futures, too, point to a positive open, reversing a three-day skid. Investors the world over are keen for details on whether President Joe Biden can salvage his $2 trillion Build Back Better social spending package. Its uncertain fate has added a wave of volatility to the Russell 2000 over the past month.
Build Back ever?
The future of Build Back Better looked rocky this weekend after the crucial swing vote, West Virginia Sen. Joe Manchin, went on Fox News Sunday to declare he could not support the president’s ambitious spending plan.
Reports out of Washington, D.C., on Monday, however, suggest the White House is not finished negotiating with Manchin, leaving open a slim hope the two Joes—described repeatedly by White House press secretary Jen Psaki yesterday as “longtime friends”—could patch up their differences.
As of 4:30 a.m. E.T., the S&P 500 and Nasdaq futures were trading up 1%—not nearly enough to recoup Monday’s losses, but enough to lift most risk assets.
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