It was another volatile day on Wall Street, though Tuesday's price action was to the upside as buyers emerged after three straight days of selling.
"While there has not been any change to the broader narrative there were a couple of headlines that are helping sentiment," says Michael Reinking, senior market strategist for the New York Stock Exchange.
Specifically, he pointed to reports that President Joe Biden's Build Back Better bill may not be completely dead, with Senate Majority Leader Chuck Schumer saying he will schedule a vote on the social infrastructure bill in January.
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Plus, "there is some relief that President Biden's strategy to deal with the omicron surge does not include lockdowns," Reinking adds. Instead, the president's plan of attack includes distributing 500 million free at-home COVID-19 testing kits and deploying medical staff to hard-hit areas.
Meanwhile, solid quarterly reports from athletic footwear and apparel maker Nike (NKE, +6.2%) and chipmaker Micron (MU, +10.5%) created tailwinds for the broader consumer discretionary (+2.6%) and technology (+2.5%) sectors, respectively.
After posting sharp losses in Monday's session, the Dow Jones Industrial Average finished today up 1.6% at 35,492, the S&P 500 Index gained 1.8% to 4,649 and the Nasdaq Composite spiked 2.4% to end at 15,341.
Other news in the stock market today:
- The small-cap Russell 2000 surged 3.0% to end at 2,202.
- U.S. crude oil futures jumped 3.7% to finish at $71.12 per barrel.
- Gold futures gave back 0.3% to settle at $1,788.70 an ounce.
- Bitcoin rallied 3.4% to $48,608.66. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Rite Aid (RAD) rose 21.4% after the drugstore chain reported earnings. In its third quarter, RAD reported revenues of $6.23 billion on adjusted earnings of 15 cents per share. While Rite Aid fell short of the top-line consensus estimate of $6.32 billion, it beat on the bottom line, with analysts expecting the company to report a per-share loss of 32 cents. Additionally, RAD said it has identified 63 locations it plans to shutter in the first phase of its store closure program, which it believes will result in a roughly $25 million benefit to its annual EBITDA (earnings before interest, taxes, depreciation and amortization).
- Citrix Systems (CTXS) was another big mover today, jumping 13.6%. Today's pop came after a Bloomberg report indicated Elliott Investment Management and Vista Equity Partners are potentially mulling a joint takeover of the enterprise software firm, according to people familiar with the matter. Elliott took a stake in CTXS in the third quarter of this year.
Keep Value Stocks on Your Radar
Today's headlines were well-received, but there's still plenty of anxiety as we head into 2022.
For starters, inflation continues to hover at levels not seen in decades, eating away at profit margins for businesses. At the same time, the Federal Reserve intends to hike interest rates several times next year. These macro realities only add to the pile of risks both companies and investors face, but that hardly means all hope is lost.
"The cyclical value sectors such as energy, materials and industrials have historically done well leading up to the start of Fed rate hikes," says Jeff Buchbinder, equity strategist for LPL Financial. While every cycle is different, "we wouldn't be surprised to see value stocks make another run as the economy picks up some speed after the latest waves of COVID-19 variants fade," he adds.
For investors looking to position for higher inflation and higher interest rates, we've recently compiled a list of the top-rated value stocks heading into 2022. These are some of the most compelling plays, according to Wall Street pros, and all sport cheap valuations relative to the broader market.
Karee Venema was long NKE as of this writing.
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