S&P 500 Rebounds as Buyers Load Up on ‘Oversold’ Stocks

© Reuters

By Yasin Ebrahim

Investing.com – The S&P 500 clawed back some losses Thursday, bouncing back from oversold levels following a rout a day earlier after the U.S. confirmed its first case of the Omicron variant of Covid-19.

The S&P 500 rose 1.50%, the Dow Jones Industrial Average gained 1.94%, or 660 points, the Nasdaq added 0.67%.

“Yesterday’s bearish reversal pushes U.S. equities into oversold territory once again and sets us up for another strong rally effort,” Janney Montgomery Scott said in a note. But there is “likely (still) more to go in this current market correction.”

Financials outperformed the broader market, led by banking stocks as Treasury yields rose after some on Wall Street suggested that a potentially more contagion omicron variant could speed up the end of the pandemic and ultimately cause the yield curve to steepen

“If the market were to anticipate that scenario — omicron could be a catalyst for steepening (not flattening) the yield curve, rotation from growth to value, selloff in COVID and lockdown beneficiaries and rally in reopening themes,” chief global strategist Marko Kolanovic and quant strategist Bram Kaplan wrote in a note to clients.

Regional banks including Fifth Third (NASDAQ:FITB), People’s United Financial (NASDAQ:PBCT), and SVB Financial (NASDAQ:SIVB) were among the biggest gainers in financial, rising more than 5%.

Industrial were also helped by a rebound in airline stocks, led by Boeing Co (NYSE:BA) China cleared the aircraft maker’s 737 Max to return to the skies on Thursday.  The 737 Max returned to service in China after being grounded for more than two years following two fatal crashes.

Delta Air Lines (NYSE:DAL), Alaska Air (NYSE:ALK), United Airlines Holdings Inc (NASDAQ:UAL) were also sharply higher.

Energy stocks were boosted by rising oil prices after OPEC and its allies decided to stick with their current plan of lifting oil output by 400,000 barrels a day in January.

On the economic front, better-than-expected weekly jobless claims data stoked optimism on the labor market recovery ahead of Friday’s monthly jobs.

The Labor Department reported that 222,000 people filed for unemployment insurance, confounding economists’ expectations for an 18,000 rise.

Nonfarm payrolls are expected to have increased by 560,000 in November, with unemployment rate expected to drop to 4.4%.

In tech, Apple (NASDAQ:AAPL) pared some losses after the tech giant warned some its chip supplier of weaker demand for its latest iPhones, Bloomberg reported.

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