By Yasin Ebrahim
Investing.com – The S&P 500 jumped Tuesday, as investors swooped in to buy beaten down cyclical stocks following the Omicron-fuelled selloff, while a surge in Nike and Micron also lifted markets.
The S&P 500 rose 1.6%, the Dow Jones Industrial Average gained 1.5%, or 537 points, the Nasdaq climbed 2.2%.
The Centers for Disease Control and Prevention reported that the Omicron variant is now the dominant strain of Covid in the U.S., representing 73% of cases compared with just 13% a week earlier.
Against the backdrop of the ongoing climb in Covid-19 cases, and potential for further restrictions to curb the spread of the new variant, investors piled into beaten sectors such as financials as U.S. treasury yields rebounded.
On the earnings front, Nike and Micron were in the spotlight after delivering better-than-expected quarterly results.
Nike (NYSE:NKE) earnings of 83 cents per share topped Wall Street estimates as strong growth in the North America offset weakness in its key China market. Its share rose more than 6%.
“Overall, we remain bullish on the name, as the brand remains extremely strong, they continue to benefit from the shift to Digital, and the supply chain issues appear to be closer to the end than the beginning,” Wedbush said in a note.
Micron Technology (NASDAQ:MU) also beat consensus estimates and issued strong guidance, driven by ongoing demand for memory and easing supply chain disruptions.
Also helping chip stocks, Nvidia (NASDAQ:NVDA) rose more than 3% after the chipmaker was flagged as “top pick” by UBS, citing a “wide moat.”
The move higher in chip stocks coincided with a rebound in big tech once, led by Meta, formerly known as Facebook (NASDAQ:FB), which rose nearly 3%.
Microsoft (NASDAQ:MSFT), Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and Amazon were up more than 1%.
A day after negotiations around the Biden administration's ‘Build Back Better’ spending package were brought to halt as Senator Joe Machin rejected the package, investors believe the hit to economic growth will be manageable.
The failure of the package in its current form will take “a bite out of GDP and spending growth in early 2022, but the overall consequences should be manageable,”Morgan Stanley said.