US Equity Markets Boosted By Fauci's Covid Comments

US stock markets closed higher on Monday with economically sensitive sectors and travel-related stocks soaring as investors were encouraged by some optimistic comments from a top US official on the latest Covid-19 variant.

While the Omicron Covid-19 variant has caused alarm and some new restrictions around the world, investors appeared to be reassured by Anthony Fauci, the top US infectious disease official, who told CNN that "thus far it does not look like there's a great degree of severity to it," although he also said more study is needed.

"People are less worried about the variant," said King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco.

Lip also cited a boost from news that China's central bank would cut the amount of cash that banks must hold in reserve, potentially boosting overseas companies that sell products in China as well as China's economy.

The S&P 500 gained 1.2 percent to end at 4,591, while the Nasdaq Composite gained 0.9 percent to 15,225. The Dow Jones Industrial Average rose 1.9 percent to 35,227.

Wall Street's major indexes have been swinging wildly since November 26 as investors digested news of the Covid-19 Omicron variant and then Federal Reserve Chair Jerome Powell's hawkish comments last week about a speedier tapering of government bond-buying to tackle surging inflation.

"If today's strength in the blue-chips can sort of sustain itself, that might give the rest of the market the ability to start to feel confident," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

Still, Goldman Sachs on Saturday cut its outlook for US economic growth to 3.8 percent for 2022, citing risks and uncertainty around the emergence of Omicron. Investors had also been bracing for a potential hit to corporate earnings, particularly among retailers, restaurants and travel companies. (Reuters)