U.S. stocks rose in weak post-Christmas trading on Monday, while analysts wondered if the favorable market conditions that brought Wall Street to its highest levels in history this year will continue in 2022.
The broad-based S&P 500 stock index rose 1.4 percent, expanding its penetration to record territory after reaching a new all the time high on Thursday. The increase came after weeks of volatility caused by the coronavirus variant Omicron and the U.S. Federal Reserve, which decided to reduce its emergency stimulus measures.
Shares of energy led the growth, with Brent oil prices rising 3.2 percent, to $ 78.60 a barrel. Technology stocks also rose, and technology-driven Nasdaq Composite stocks added 1.4 percent.
S&P is up more than a quarter this year, driven by a return to corporate revenue due to a fall caused by the coronavirus in 2020 and the lowest interest rates that prompted investors to increase on stocks.
Monetary conditions in the United States remain very adaptable and recent economic data were strong. However, some Wall Street strategists expect more muted gains on the stock market next year. The Fed is preparing to raise US interest rates to fight it off jump in inflation spurred by pressure on supply chains due to constraints caused by the pandemic, as well as higher rents and energy prices.
“We are generally constructive about the outlook for U.S. stocks for 2022, albeit with expected growth lower than in previous years,” Citi strategist Scott Chronert wrote in a note to clients. “Current concerns about inflation imply that the Fed’s response will remain critical to market direction.”
Louis Gave, of research firm Gavekal, warned that Omicron could “wreak havoc on farms and stretch supply chains”. But he also pointed to, he said, “encouraging” South African data suggesting that a highly portable new variant could be less likely result in hospitalization rather than Delta.
The Fed is ready to end its emergency stimulus package, in which it bought about $ 120 billion in government and mortgage bonds a month throughout pandemic, in March. Central bank officials expect raise interest rates three times in 2022.
Yield on the reference 10-year U.S. Treasury bond, which is the opposite of the price of a government debt security, fell 0.02 percentage points to 1.48 percent on Monday.
This debt instrument has traded relatively peacefully this month because investors set prices in a short period of rate growth that would not significantly affect bond yields, relative to cash, over time.
Short-term government debt, however, has borne the brunt of stakes on tighter monetary policy. Yield on the two-year treasury rose 0.02 percentage points to 0.70 percent, around its highest point since March 2020.
By the way, the regional European stock index Stoxx 600 rose by 0.6 percent. Trading on the London FTSE 100 was stopped due to the holidays.
The dollar index, which measures the U.S. currency against six others, including the sterling and the euro, rose 0.1 percent.
Sterling rose 0.4 percent against the dollar to $ 1.3442. Sajid Javid, the British Minister of Health, said on Monday that there would be no new restrictions on Covid in England before the new year. The three decentralized British administrations of Scotland, Wales and Northern Ireland have reintroduced some measures.