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Santa Rally Underway? Dow's Best Trading Day Since March

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Completely erasing the losses it accrued throughout last week, the Dow rose 1.87% this Monday — +647 points, to nearly 35,228. The S&P 500 is now back within 3% of its all-time highs it set last month. The Nasdaq lagged the others, but still gained +0.93% on the day (still 6% from its all-time highs), while the small-cap Russell 2000 has been raging since nearing correction territory, +2.05% on the day to cross back above 2200.

A weekend of data and analysis is putting investors’ concerns regarding the Omicron variant of Covid-19 to rest a bit, including an “encouraging” comment from Dr Fauci on how the global community has handled the new variant thus far. This has led to some bargain hunting in the sectors which sold off the heaviest on last week’s new Covid news. Carnival Cruise Lines (CCL - Free Report) won the S&P for the day, +8%. Expedia (EXPE - Free Report) made +6.7% Monday, as its CEO quipped that “over time, travelers will grow desensitized to Covid news.”

Energy was also an outperformer Monday, with a Saudi oil price hike on projections that fuel consumption will be headed back toward pre-pandemic levels. That said, Natural Gas tumbled -11% on the day. Weather modeling in both the U.S. and Europe are now predicting temperatures to be much warmer than initially expected, pulling the heating gas commodity down past previous thresholds. ExxonMobil (XOM - Free Report) was up +1.2% in Monday trading.

The Dow closed down from its 777-point intraday high; it felt like a real exhale after a week of unsure developments, a (verbal) tightening of the gears by the Fed and a worse-than-expected employment report from the U.S. government weighed on the blue-chip index. Boeing (BA - Free Report) led the way, +3.7%, followed, perhaps surprisingly, by Intel (INTC - Free Report) .

It was the buying back of Consumer Discretionary today, though, that is the big story: not only cruise lines and travel sites, but hotel major Marriott (MAR - Free Report) was +4.4% Monday. Should the Expedia CEO prove prescient, consumers may well look past coronavirus conditions in ways we hadn't dared most of the past year-plus: vaccinations, boosters, easy access to testing and anti-viral therapies are all weapons at our disposal — none of which we had back in December 2020. The jury is still out on how widespread and/or severe the Omicron variant may yet prove, but for now market participants are taking a positive tone.

’Tis the season, anyway. It’s too soon to say we’re definitely entering a Santa Claus rally — often these occur directly after the holidays, instead of before/during them — but a strongly bullish start to the trading week is nothing to sneeze at.

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