(Bloomberg) — U.S. stocks fell for the first time in five days amid declines in megacap tech shares.
The S&P 500 dropped, following the benchmark’s 69th record close this year on Monday. The Nasdaq 100 retreated on turnarounds in four-day rallies for the likes of Nvidia Corp., Apple Inc. and Alphabet Inc. Still, the Dow Jones Industrial Average stayed in the green thanks to reopening beneficiaries such as Walt Disney Co. and Boeing Co.
Trading was choppy as moves were exaggerated by thin volumes, with shares changing hands in the major benchmarks about a third below daily averages for the past 30 days. Max Gokhman, chief investment officer at AlphaTrAI, attributed today’s reversal to gravity.
“The bump we saw on Monday didn’t have a clear catalyst, so we’re giving some of that back today,” he said. “I don’t think today’s pullback portends further declines, but this week’s seasonally low volume mixed with unseasonably higher volatility at the individual stock level means that one errant headline could give us a significant move in either direction as we get into the last stretch of 2021.”
A tidal wave of omicron infections lifted global Covid-19 cases to a daily all-time high on Monday, meanwhile investors have taken some comfort from studies suggesting omicron, while highly contagious, causes less severe illness. A University of Oxford immunologist said the omicron variant is not “the same disease we were seeing a year ago,” reinforcing reports about the strain’s milder nature.
“What we’re seeing with each of these variants is they’re just not as severe,” said Anderson Lafontant, Miracle Mile Advisors senior advisor on Bloomberg TV. “One area that we like a lot is energy. We’re viewing this as a reopening play.”
Read more: CDC Pares Omicron View to a Still-Dominant 59% of U.S. Cases
Data Tuesday showed the Richmond Fed’s manufacturing survey rose in December, beating estimates, with the prior reading revised higher, while growth in U.S. home prices cooled for a third straight month in October.
“The reason the markets are able to rally is because they’ve sort of moved into endemic phase from pandemic phase and I think that’s probably a positive for the markets and for the economy,” Stuart Kaiser, head of equity derivatives research at UBS Group AG, said on Bloomberg TV. “We’re going to get new variants over time but you need to deal with those in a risk-managed way.”
Global shares are on course for a third year of double-digit returns, powered by the U.S. surge. Analysts remain bullish on earnings forecasts even amid coronavirus waves and a shift by some key central banks toward tighter monetary policy to fight high inflation.
In cryptocurrencies, Bitcoin gave up a recent advance to slide below the $50,000 level, suggesting investors in the riskiest corners of global markets are becoming more circumspect.
What to watch this week:
- U.S. initial jobless claims, Thursday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.2% as of 2:14 p.m. New York time
- The Nasdaq 100 fell 0.6%
- The Dow Jones Industrial Average rose 0.2%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.2% to $1.1301
- The British pound fell 0.1% to $1.3423
- The Japanese yen was little changed at 114.79 per dollar
Bonds
- The yield on 10-year Treasuries was little changed at 1.48%
- Germany’s 10-year yield was little changed at -0.24%
Commodities
- West Texas Intermediate crude rose 0.6% to $76.04 a barrel
- Gold futures fell 0.1% to $1,806.90 an ounce
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