Markets rebound as investors go bargain hunting after recent selling

Dow soared 617 (closing not far from the highs), advancers over decliners about 3-1 & NAZ climbed 127.  The MLP index recovered 3+ to the 174s & the REIT index skyrocketed 13+ to the 475s.  Junk bond funds were mixed & Treasuries saw a little selling.  Oil went up 1+ to 67 & gold sold off, down 17 to 1766 (more on both below).

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Minnesota public health authorities confirmed what appears to be the 2nd US case of the omicron Covid variant, in a resident who recently returned from New York City, the state's dept of health said.  The man, who was fully vaccinated & has since recovered, traveled to New York City to attend the Anime NYC 2021 convention at the Javits Center Nov 19-21.  He developed symptoms shortly after returning & tested positive on Nov 22.  The first omicron case was confirmed in California by US officials yesterday in a person who recently returned to San Francisco from a trip to South Africa.  New York health officials haven't yet confirmed any cases in the state, Gov Kathy Hochul told reporters.  New York Health Commissioner Dr Mary Bassett said it's just a matter of time before an omicron case is confirmed somewhere in the state.  “We now have an exposure. We fully expect that it will be detected in coming days,” she added.  Hochul said conference attendees were required to get vaccinated & she recommended that they all get tested.  She said the convention organizers have contact information for all attendees, so that will simplify contact tracing to monitor any potential outbreaks.  “Everyone had to be vaccinated in order to participate in the first place,” she continued.  “That’s why we anticipate if people who test positive, at least, based on this first individual, that the symptoms will be fairly minor.”

Second U.S. omicron Covid case reported, in Minnesota man who had traveled to New York City

A majority of US businesses are hiking prices at a rapid clip as they seek to offset the pain of soaring inflation & a lack of available workers, according to a survey of American CFOs.  The CFO Survey shows that finance chiefs are increasingly worried about labor availability, inflationary pressures & supply chain disruptions.  Nearly 90% of firms reported larger-than-normal costs increases — a sharp rise from just 6 months ago, when about 80% of businesses reported increasing the price of some goods.  Fewer than 20% of firms expect cost increases to abate within the next 6 months & most firms anticipate the cost increases will last at least another 10 months, if not longer.  "CFOs indicate that these cost pressures are not abating and will likely be with us for some time," Atlanta Fed economist Brent Meyer said.  "Many firms, especially large firms, are passing on at least some of these cost increases."  Firms reported 2 strategies in handling the rising costs:  First, an overwhelming majority – about 80% – of firms experiencing the cost pressures are passing on at least some of the increases to customers thru higher prices & 2nd, firms have said they are absorbing the cost increases by reducing margins, reducing costs in other areas, eliminating or substituting product offerings, adding contingency clauses into contracts & turning down work.  Despite the production challenges, however, most respondents in the CFO survey said they expected to see both employment & revenue growth in 2021 & 2022.

CFOs believe inflation will stick around for a while, survey shows

Apple (AAPL), a Dow & NAZ stock, shares were down following a report that said the company warned its suppliers demand is lower than expected for new iPhones this holiday season.  Its stock resisted the omicron-fueled volatility in the market this week, but word of weak demand on top of the known supply chain issues rattled investors.  AAPL did not comment.  The current qtr marks the first full qtr that the new iPhone model, the iPhone 13, will be available.  AAPL also introduced other new products ahead of the holiday shopping season, including a new version of AirPods & a redesigned MacBook Pro.  But the iPhone remains AAPL's most profitable product, so any signs of weakening demand going into the holidays are sure to send its shares lower.  Still, analysts expect AAPL to report growing revenues for the qtr after it booked more than $100B in revenue for the first time in the holiday 2020 qtr.  CEO Tim Cook said this fall that he expects revenue growth for the qtr but predicted supply constraints will cost the company at least $6B in missed revenue.  The stock dropped only 1.01.
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Apple shares slip on report of weak iPhone demand heading into holidays

The House reached a deal on a short-term gov funding bill that would prevent a shutdown before a Fri deadline.  The measure would fund the gov at current levels thru Feb 18, House Appropriations Committee Chair Rosa DeLauro said.  The House plans to pass the legislation later today.  Both chambers of Congress need to approve a spending bill by tomorrow to prevent a lapse in funding.  An extended shutdown can lead to furloughs of federal workers & the suspension of certain gov services.  The Biden administration's Office of Management & Budget pushed for “swift passage” of the spending measure today.  If the House approves the bill today, the Senate could still pose problems as lawmakers rush to avoid a crisis.  Any senator has the ability to stop the bill's quick passage & a handful of Reps have threatened to delay it as they try to bar the Biden administration's vaccine mandate for private employers.  Senate Minority Leader Mitch McConnell opposes the push within his caucus to delay the funding bill.  Today, he said that he does not think “shutting down the government over this issue is going to get an outcome,” noting the mandate has hit a wall in federal courts.  “We’re not going to shut the government down,” he said. “That makes no sense for anyone. Almost no one on either side thinks that’s a good idea.”  Majority Leader Chuck Schumer knocked the GOP holdouts for risking an “unnecessary and dangerous” shutdown.  He said on the Senate floor that “I hope cooler heads will prevail on the other side so we can keep the government funded before tomorrow’s deadline.”

Congress strikes deal to avoid government shutdown 1 day before deadline — but roadblocks remain

Gold prices fell modestly, after a volatile few days of trading since the announcement of a new omicron variant of COVID late last week.  The most active Feb gold contract slipped 0.9% ($16) to $1768 an ounce after posting a climb of 0.4% yesterday.  Gold, based on the most-active contract, has seen about a 1.1% drop for the week so far.  Gold has struggled to see much haven benefit from the variant, with the precious metal barely changed this week.  Among US economic data, weekly jobless claims rose 28K to 222K, partly reversing a big plunge in the prior week that had pushed new jobless claims down to 52-year low.  Meanwhile, the ICE US Dollar Index was trading flat at 96.040 & the 10-year Treasury note yields were at 1.445%, up from 1.433% yesterday.  Changes in the $ & Treasury yields can influence gold because the metal is priced in $ & doesn't bear any interest.

Gold settles at a more than 7-week low as investors monitor omicron variant 

Major oil producers agreed to continue their existing crude production policy gradually lifting output in Jan, but also left the door open to make any needed adjustments based on market developments, by keeping the meeting “in session.”  OPEC+ said it reconfirmed its production adjustment plan & raise monthly overall production by 400K barrels per day in Jan 2022, but it also said that members agreed that the “meeting shall remain in session pending further developments of the pandemic and continue to monitor the market closely and make immediate adjustments if required.”  OPEC+ also extended its “compensation period” until the end of Jun 2022.  Countries that have produced oil above their quota are required to make up for that overproduction.  Meanwhile, last month the US announced plans to release 50M barrels of oil from the Strategic Petroleum Reserve, in coordination with reserve releases from other major oil-consuming nations, in an effort to help reduce retail gasoline prices.  Oil prices pared early losses, then finished higher following the OPEC+ decision.  Jan WTI crude rose 93¢ (1.4%) to settle at $66.50 a barrel after trading as low as $62.43.  Feb Brent crude settled at $69.67 a barrel, up 80¢ (1.2%)   The next OPEC and non-OPEC ministerial meeting will be held on Jan 4.

OPEC+ takes unusual tack by keeping existing production policy, while leaving meeting ‘in session’

The stock market was heavily oversold & bargain hunters returned.  But the Dow is only back to where it was in May on the way up.  The Volatility Index fell a little today to the 27s, but is far above the mid teens in the summer.  Many investors are nervous with all the unknowns out there.  High volatility can be expected to continue.

Dow Jones Industrials