US Stocks Rise as Tech Shares Rally on Easing Interest Rate Fears

U.S. equity markets are bouncing back from this week’s sell-off, with the Nasdaq moving out of correction territory and the Dow and S&P 500 rising more than 1%.

Tech stocks are leading the advance as concerns about rising interest rates ease, and each of the so-called FAAMG stocks are gaining. Tesla, Inc. (TSLA) shares are up almost 4%. Shares of Salesforce com, Inc. (CRM) are rising 1.5%.

Key Takeaways

  • U.S. stocks are bouncing back from this week's sell-off, powered by tech stocks as rising interest rate concerns ease.
  • The Nasdaq has moved out of correction territory, and the Dow and S&P 500 have gained more than 1% at their highest today.
  • Oil futures are continuing their climb, boosting shares of energy companies.

The Travelers Companies, Inc. (TRV) shares are leading the Dow Jones Industrial Average (DJIA) higher on the insurance company's better-than-expected sales and profit. Shares of financial firms are advancing after a week of mixed earnings news. Cruise lines, casinos, hotels, and other travel-related companies are rising on optimism that the negative impacts of the omicron variant of COVID-19 will be short term.

Oil futures are continuing their climb, boosting shares of energy companies. The yield on the 10-year Treasury note is holding steady at 1.83%.  

The price of Bitcoin (BTC) is up 3%, and other major cryptocurrencies are trading higher. The dollar is now higher versus the euro.

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October Surprise: Chart of the Day

Chart of the day US initial claims for unemployment

U.S. Department of Labor

Initial jobless claims jumped to a three-month high last week in a sign the spread of the omicron variant of COVID-19 may be affecting the U.S. job market.

The Labor Department reported that weekly unemployment claims rose by 55,000 to 286,000, well above economists' estimates and the most since the week of Oct. 16. It was the third consecutive week of gains. Claims have increased by 98,000 since they hit a 52-year low in early December.

Continuing claims for the week ending Jan. 8 were up by 84,000 to 1,635,000, also more than expected. However, the four-week moving average declined by 55,250 to 1,664,220, the lowest level since April 27, 2019.

Three states reported increases in initial claims for the week ending Jan. 8 that exceeded 10,000. They were California (+11,295), New York (+10,639), and Texas (+10,437). The largest decreases were in Massachusetts (-2,079), Connecticut (-1,437), and Michigan (-1,158). Those were the only states that had a drop of more than 1,000.

United Airlines: Stock of the Day

United Airlines Holdings, Inc. (UAL) shares are down after the company warned that flight disruptions caused by the spread of the omicron variant of COVID-19 have hurt bookings, and its revenue in the first quarter will fall short of estimates. However, the airline said that it is optimistic about demand returning in the spring and beyond.

United indicated that it expects sales in the current quarter to decline 20% to 25% from what they were in 2019. Costs, excluding fuel, are projected to rise 14% to 15% higher than three years ago. It also anticipates first quarter and full-year capacity to be below 2019 levels.

CEO Scott Kirby said that, because of omicron, the airline has had to fight through "unprecedented obstacles to, once again, overcome the new and daunting challenges that COVID-19 is bringing to aviation."

United reported fourth quarter revenue jumped 140% from a year earlier to $8.19 billion on strong holiday bookings. Still, that was 25% below sales in the same period in 2019. It posted a quarterly loss of $1.60 a share. Shares of United Airlines have fallen 1% over the past year.

Rivals American Airlines Group, Inc. (AAL) and Delta Air Lines, Inc. (DAL) have also announced that the impact of omicron would delay their recovery from the pandemic.

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  1. U.S. Department of Labor. "Unemployment Insurance Weekly Claims."

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