A third consecutive day of Omicron rallying saw all the indexes up substantially again, all on optimism that Omicron is leading to far less hospitalizations than delta, and that data showed the economic backdrop to be on a very strong footing.  Investors once again pulled money out of the safe haven defensive sectors and back into “risk-on” cyclical recovery stocks and the tech growth stocks.  The S&P is still up 26% for the year and, given the holiday week, volume was again considerably below average at 8 billion shares traded. 

Thu  December 23, 2021  5:53 PM

U.S. stocks end at record high, oil prices rise as Omicron fears abate

By Jessica DiNapoli

DJ: 35,753.89  +261.19        NAS: 15,521.89  +180.80       S&P: 4,696.56  +47.33     12/22

DJ: 35,950.56  +196.67        NAS: 15,653.37  +131.48       S&P: 4,725.79  +29.23     12/23

NEW YORK, Dec 23 (Reuters) - The S&P 500 notched a record-high close on Thursday, with oil prices also rising, as investors and traders were optimistic about positive economic data and discounted the impact of the Omicron coronavirus variant on the economy, even as COVID-19 case counts soar.  Stocks rose broadly on the last trading day of the week ahead of a long Christmas weekend in the United States, after data showing consumer spending rose 0.6% last month. The number of Americans filing new claims for unemployment benefits held below pre-pandemic levels last week, helping add to the gains. read more  Signs that Omicron is less likely to lead to hospitalization, and indications that both Merck's  (MRK.N)  and Pfizer's  (PFE.N) COVID-19 anti-viral pills are effective against the variant, added to the festive cheer in the market.

“Today is a very calm day; it’s the relief over Omicron apparently not being as bad as we feared,” said Ryan Detrick, chief market strategist at LPL Financial. “It’s a positive sign as we head into 2022. The economic backdrop is on very strong footing."  "The bull might have a few more tricks up his sleeve before the year ends," Detrick added.

The Dow Jones Industrial Average (.DJI) rose 0.55% to 35,950.56 and the S&P 500 (.SPX) gained 0.62% to 4,725.79. The Nasdaq Composite (.IXIC) added 0.85% to 15,653.37.  MSCI's gauge of stocks across the globe (.MIWD00000PUS) gained 0.72%.

As investors pulled money out of safe-haven assets, the benchmark 10-year yield on U.S. Treasuries was up 3.5 basis points at 1.4926% in afternoon trading. The Treasury markets closed at 2 p.m. ET due to the holiday weekend. read more  The rise of risk-on investments ahead of Christmas, dubbed a "Santa Claus rally" by traders, also nudged gold and oil higher.  The safe-haven dollar crept higher against a basket of currencies, but its gains were capped by the risk-on sentiment supporting the Australian dollar and British pound. read more

U.S. stocks posted a third successive day of gains as they recovered from a jolt on Monday when worries about Omicron pushed investors to safe-haven assets.  The risk of needing to stay in the hospital for patients with the new variant is 40% to 45% lower than for patients with the Delta variant, according to research by London's Imperial College published on Wednesday. read more  However, experts have said that U.S. President Joe Biden's attempts to curb the spread of Omicron by distributing free at-home rapid tests, though welcome, were too little, too late. read more

Oil prices extended gains on Thursday as the signs the worst effects of the Omicron variant might be containable prevailed over the threat of new travel curbs. read more  U.S. crude recently rose 1.37% to $73.76 per barrel and Brent was at $76.73, up 1.91% on the day. 

The S&P 500 is up about 26% so far this year. Still, the environment for equities could be changing heading into next year as the Federal Reserve is expected to begin raising interest rates in 2022.

Advancing issues outnumbered declining ones on the NYSE by a 2.40-to-1 ratio; on Nasdaq, a 2.22-to-1 ratio favored advancers.  The S&P 500 posted 35 new 52-week highs and no new lows; the Nasdaq Composite recorded 62 new highs and 80 new lows.

About 8 billion shares changed hands in U.S. exchanges, compared with the 11.8 billion daily average over the last 20 sessions.