The Dow spent most of the day heavily in the red until the late news of the Pfizer vaccine offering protection against Omicron triggered a comeback and a close modestly in the black. And it became another risk-on day with investors continuing the migration back to tech, favoring quality growth stocks over cyclicals. The market now believes that it won’t take much to tame inflation and thus any coming rate hikes are likely to be modest, which provided another boost to equities. The S&P, falling 4.4% during Thanksgiving week due to the Omicron panic has today regained almost all its lost ground, being now less than one point below the pre-panic close.  With the positive vaccine news, the S&P travel stocks were the biggest gainers.  Volume was a little below average at 10.3 billion. 

Wed  December 8, 2021  6:32 PM

Wall St closes higher as vaccine update feeds optimism

By Caroline Valetkevitch and Sinéad Carew

DJ: 35,719.43  +492.40       NAS: 15,686.92  +461.76        S&P: 4,686.75  +95.08     12/7

DJ: 35,754.75  +35.32         NAS: 15,786.99  +100.07        S&P: 4,701.21  +14.46     12/8

NEW YORK, Dec 8 (Reuters) - Wall Street closed slightly higher on Wednesday with the three major indexes managing their third straight day of gains after test data showed the COVID-19 vaccine from Pfizer and BioNTech offered some protection against the new Omicron variant.  Pfizer (PFE.N) and BioNTech said their three-shot course of the vaccine was able to neutralize the Omicron variant in a laboratory test and they could deliver an upgraded vaccine in March 2022 if needed. read more  Investors reacted by piling into travel related stocks. The S&P 1500 Airlines index (.SPCOMAIR) closed up 1.96%. Its session high was the highest since Nov. 24, which was just before news of the variant emerged.

Markets have been hugely volatile since the variant was discovered, with investors worried Omicron could force new restrictions in countries and hurt the global recovery.  In a bid to slow its spread, Britain said Wednesday it could implement tougher measures, including advice to work from home, as early as Thursday. read more  While Pfizer said Omicron protection was reduced among people who took just two doses of the vaccine, investors were still somewhat reassured.  With Nasdaq outperforming the Dow, Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago described the session as a "perfect risk-on kind of day."  "A lot is revolving around virus news. It's a reopening trade more than anything else," said Nolte.

The Dow Jones Industrial Average (.DJI) rose 35.32 points, or 0.1%, to 35,754.75, the S&P 500 (.SPX) gained 14.46 points, or 0.31%, to 4,701.21 and the Nasdaq Composite (.IXIC) added 100.07 points, or 0.64%, to 15,786.99. The S&P finished less than a point below where it closed before a steep sell-off. The index fell as much as 4.4% between Nov. 24, the day before Thanksgiving, and Friday, as investors fled risky bets due to Omicron fears and concerns about rising interest rates after a Federal Reserve update last week.

"Equity investors are buying into the thesis that rates won't have to go up very much to tame inflation. It makes them more comfortable buying stocks although more inclined to buy quality growth stocks than cyclicals," said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.  Sector gains were led by communication services (.SPLRCL), which rose 0.75% followed closely by healthcare (.SPXHC), up 0.74%. With only three of the 11 major S&P sectors losing ground on the day, the laggards were financials (.SPSY), down 0.46%, consumer staples (.SPLRCS), down 0.37% and utilities (.SPLRCU), which edged down 0.1%.

WHO director-general Tedros Adhanom Ghebreyesus said governments should urgently reassess their national responses to COVID-19 and accelerate their vaccination programs. read more  So-called reopening stocks, most affected by the pandemic's lockdowns, were among the S&P's top gainers on Wednesday. These included Norwegian Cruise Line , up 8%, Carnival Corp (CCL.N), up 5.5% and Royal Caribbean (RCL.N), up 5.2%.  Goodyear Tire & Rubber Co (GT.O) rose 2.6% after Deutsche Bank upgraded the stock to "buy" from "hold".  Stanley Black & Decker (SWK.N) advanced 3.3% after Sweden's Securitas (SECUb.ST) agreed to buy its electronic security solutions business for $3.2 billion. read more

Advancing issues outnumbered declining ones on the NYSE by a 1.68-to-1 ratio; on Nasdaq, a 1.93-to-1 ratio favored advancers.  The S&P 500 posted 31 new 52-week highs and no new lows; the Nasdaq Composite recorded 36 new highs and 39 new lows.

On U.S. exchanges 10.3 billion shares changed hands compared with the 11.52 billion average for the last 20 sessions.