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S&P 500 ends lower to snap four-day win streak, while Dow extends rally in 2021’s final week of trading

MarketWatch logo MarketWatch 12/28/2021 Christine Idzelis
© Scott Heins/Getty Images
MARKET SNAPSHOT

U.S. stock indexes closed mostly lower Tuesday, with the S&P 500 index and Nasdaq Composite snapping a four-day winning streak, as some investors looked toward 2022 with optimism, despite record COVID-19 cases resulting from the spread of the omicron variant.

How did stock indexes trade?
  • The Dow Jones Industrial Average DJIA rose 95.83 points, or 0.3%, to end at 36,398.21, its second highest close ever and booking a fifth straight day of gains, according to Dow Jones Market Data.
  • The S&P 500 slipped 4.84 points, or 0.1%, to close at 4,786.35, its second highest finish ever after setting an intraday record at 4,807.02.
  • The Nasdaq Composite Index fell 89.54 points, or 0.6%, to finish at 15,781.72.

On Monday, the S&P 500 rose 65.40 points, or 1.4%, to 4,791.19, its 69th record finish for 2021. The Dow climbed 351.82 points, or 1%, to end at 36,302.38, its fourth-highest close in history. The Nasdaq Composite climbed 217.89 points, or 1.4%, to close at 15,871.26.

What drove markets?

Investors are betting that the spread of the omicron variant of the coronavirus won’t capsize economic growth, even if expectations for another powerful run-up in stocks seems doubtful following outsize gains in 2021.

The market is expecting omicron to be “pretty mild” despite being highly contagious, anticipating that the variant is unlikely to lead to “serious lockdowns” in the U.S., said Scott Wren, senior global market strategist at Wells Fargo Investment Institute, in a phone interview Tuesday. Meanwhile, holiday-shopping sales looked “pretty good,” giving the stock market some momentum in the final stretch of 2021.

On Monday, the market set off on its best so-called Santa Claus Rally, which tends to show up for U.S. stocks in the final week of December and first two trading sessions of January, in about two decades.

“It seems that last week’s reports confirming that the omicron coronavirus variant is not as deadly as prior strains, kept market participants willing to increase their exposure this week as well,” said Charalambos Pissouros, head of research at JFD Group.

While the omicron variant spreads around the globe, wreaking havoc on holiday travel due to rising cases among airline staff, investors may have taken heart from news Monday that the U.S. Centers for Disease Control and Prevention cut its recommended COVID-19 isolation time to five days, from 10, if affected individuals are symptom-free.

Still, Apple said it would temporarily close 11 New York City stores as a precaution against rising cases. And major cities around the world, including New York City, are paring down New Year’s Eve celebrations as a way of combating the virus’s spread. Apple’s shares closed 0.6% lower Tuesday.

Read: Big Tech heads for ‘a year of thousands of tiny tech papercuts,’ but what antitrust efforts could make them bleed?

In a light week for U.S. economic data, the S&P CoreLogic Case-Shiller 20-city price index posted an 18.4% year-over-year gain in October, down from 19.1% the previous month. That measure of U.S. home prices, released Tuesday, marked the third consecutive month showing annual appreciation occurred at a slower pace.

“It’s good for the housing market if price appreciation slows because then more people can afford housing,” said Wren. “First-time home buyers are having a tough time affording these prices.” 

Meanwhile, China Evergrande Group the heavily indebted real-estate developer, said that construction work had resumed at more than 90% of its stalled residential projects.

Wren sees no major headwinds for the U.S. stock market for the remainder of 2021.

“For these next few days there’s no reason to think the market’s going to have any kind of meaningful correction unless there would be some complete surprise,” said Wren. Wells Fargo Investment Institute forecasts that the S&P 500 index will rise to 5,200 in 2022, based partly on expectations for good growth in company earnings, he said.

Which companies were in focus? Shares of Carnival Corp. closed 0.2% lower as investors considered that the Centers for Disease Control and Prevention indicated many of the company’s cruise ships had reached “yellow” status as of Dec. 27, meaning reported cases of COVID-19 have met the threshold for CDC investigation.
  • Shares of Digital Turbine IncAPPS fell 1.7%, after the media and mobile communications company announced a multiyear partnership with Alphabet Inc.’s GOOGL Google.
  • Shares of Kiniksa Pharmaceuticals Ltd. KNSA dropped 2.9%, after the biopharmaceutical company said a Phase 3 trial of mavrilimumab for treatment of COVID-19-related acute respiratory syndrome (ARDS) failed to meet the primary efficacy endpoint.
  • Mercury Systems Inc. MRCY said Tuesday that it has adopted a one-year shareholder rights plan, also known as a “poison pill,” as protection from a hostile takeover during a period in which the aerospace and defense technologies company believes its stock is undervalued. Its stock slipped about 0.3%.
  • How did other assets fare?
    • The yield on the 10-year Treasury note TMUBMUSD10Y was flat at 1.48%.
    • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up less than 0.1%.
    • Oil futures rose, with the U.S. benchmark CL00 for February delivery adding 0.5% to settle at $75.98 a barrel. Gold futures GC00 for February delivery gained 0.1% to settle at $1,810.90 an ounce.
    • Bitcoin BTCUSD was down to around $47,746, after on Monday testing a rise toward $52,000.
    • The Stoxx Europe 600 index SXXP closed 0.6% higher, while London markets were closed.
    • The Shanghai Composite SHCOMP ended 0.4% higher, while the Hang Seng Index HSI finished up 0.2%. Japan’s Nikkei 225 NIK closed 1.4% higher and China’s CSI 300 rose 0.7%.

    —Barbara Kollmeyer contributed to this article.


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