Stock Market Today: Optimism on Omicron Gives Stocks a Kick

The Dow Jones Industrial Average and the other major indexes enjoyed a caffeinated start to the trading week as some encouraging commentary about the COVID omicron strain went a long way toward re-energizing the bulls.

White House Chief Medical Advisor Anthony Fauci told CNN on Sunday that while preliminary data shows that omicron "has a transmission advantage" in South Africa, "thus far it does not look like there's a great degree of severity to it."

While Fauci added that it's too early to make any definitive statements, Wall Street clearly heard what it wanted, as a widespread rally ensued today.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of Kiplinger’s expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of Kiplinger’s expert advice - straight to your e-mail.

Sign up

Unsurprisingly, economically sensitive sectors such as industrials (+1.7%), energy (+1.5%) and financials (+1.5%) benefited the most. Travel-related plays enjoyed a boost as well – Norwegian Cruise Line Holdings (NCLH (opens in new tab), +9.5%), United Airlines (UAL (opens in new tab), +8.3%), Las Vegas Sands (LVS (opens in new tab), +7.2%) and Expedia (EXPE (opens in new tab), +6.7%) were among Monday's most noteworthy gainers.

The industrial average led the way with a 1.9% gain to 35,227, while the S&P 500 improved by 1.2% to 4,591. Technology (+0.9%), while up, still lagged most other sectors, limiting the Nasdaq Composite's advance (+0.9% to 15,225).

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

Other news in the stock market today:

• The small-cap Russell 2000 popped 2.1% to 2,203.
• Easing omicron fears sent U.S. crude futures spiking 4.9% to settle at $69.49 per barrel.
• Gold futures slipped 0.3% to end at $1,779.50 an ounce.
• Bitcoin prices were 8.6% lower from Friday afternoon's prices, though most would consider that a relief, as the digital coin bottomed out around $43,000 over the weekend. "There wasn't a clear catalyst that triggered the selloff with most pointing to deleveraging of risk assets," says Michael Reinking, senior market strategist for the New York Stock Exchange. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• Jack in the Box (JACK (opens in new tab)) sat out today's broad-market move higher, sinking 4.1% after the fast-food chain said it is buying sector peer Del Taco Restaurants (TACO (opens in new tab)) for $575 million, including debt, or $12.51 per TACO share. TACO jumped 66.1% on the day.
• Buzzfeed (BZFD (opens in new tab)) is the latest stock to debut on Wall Street. The media company went public via a merger with special purpose acquisition company (SPAC) 890 5th Avenue Partners. BZFD stock opened for trading at a per-share price of $10.95 and reached a session high of $14.77 before turning tail and settling at $8.56 – an 11.0% decline.
• Walgreens Boots Alliance (WBA (opens in new tab), +3.8%) was the best Dow stock today after Bloomberg reported late Friday that the pharmacy retail chain is exploring the potential sale of spinoff of Boots, it's U.K.-based drugstore. UBS Global Research analyst Kevin Caliendo says the reports don't come as a total surprise, "given the strategic shift toward healthcare management [WBA] highlighted at its analyst day and the emphasis management placed on the value it thought it had in its various and disparate assets (Boots, China, ABC, etc.)." If the company chooses to divest Boots, Caliendo expects Walgreens to "redeploy any proceeds to offset dilution or perhaps to help fund its Health M&A or Health Organic segments growth." He currently has a Neutral rating on the Dow stock.

Embrace the Volatility?

Up days like today aren't just nice because of the gains – they also help investors take a moment to collect themselves.

The markets have been a volatile mess ever since after Thanksgiving, when news of the omicron strain snatched headlines. We might not be done with the roller coaster, either, but Ryan Detrick, LPL Financial chief market strategist, has some words of encouragement:

"After more than a 110% rally from the March 2020 lows, perhaps investors needed a reminder that stocks can't go up forever and that while volatility might be frustrating, it is perfectly normal," he says. Ultimately, however, "We aren't minimizing the omicron uncertainty, but we remain bullish that the recovery is alive and well, with a very healthy consumer and corporate earnings backdrop leading the way.

"In the end, we expect any lost output due to omicron to simply be pushed out and recovered by early next year."

What should you do until then?

We provide a broad overview in our markets lookahead to 2022 (opens in new tab), though investors can find a multitude of sector-specific and other tactical picks in our investing outlook (opens in new tab).

However, if your comfort zone is the market's biggest, most financially stable companies – regardless of what headlines are whizzing past – look no further than this list of the hedge fund community's favorite blue-chip stocks. The "smart money" has recently filed to reveal their latest comings and goings, and these 25 stocks represent their collective highest-conviction ideas.