U.S. markets and stock exchange traded funds were mixed on Tuesday after a record run for the S&P 500, reflecting investors’ ongoing optimism in the U.S. economy despite a surge in COVID-19 infections.
On Tuesday, the Invesco S&P 500 Equal Weight ETF (RSP), which follows the S&P 500 Equal Weight Index (EWI), rose 0.1%. Meanwhile, the S&P 500 was down 0.1%, the Dow Jones Industrial Average was 0.3% higher, and the Nasdaq Composite fell 0.5%.
“What is emanating from markets is the faith that Omicron won’t be able to disrupt the economic recovery,” Antonio Cavarero, head of investments at Generali Insurance Asset Management, told the Wall Street Journal. “There is no visible risk reduction.”
Investors are becoming more risk tolerant, as some believe the Omicron variant to be less severe and hopefully also less harmful to the economy. The Centers for Disease Control and Prevention on Monday recommended isolation time for Americans with asymptomatic cases of COVID-19 to shorten to five days from the previous guidance of 10 days, Reuters reports. The shortened recommendation came after approval of new pills and vaccine drives to help fight against the ongoing pandemic, as well as a concern over the impact that the original safety guidelines could have on the economy.
“This policy change is sending the message that it is becoming more like the flu and less like the variants we saw early on when we had no treatments, no vaccines and it was much more deadly,” Thomas Hayes, managing member at Great Hill Capital, told Reuters.
Meanwhile, the U.S. equity markets are enjoying a seasonal bump, or the so-called Santa Claus rally, with CFRA Research data revealing that the S&P 500, on average, has gained 1.3% over the last five trading days of the year and the first two days of the new year since 1969.
“You cannot take much away from the action in the day and will have to really wait and see once we get into the new year how things are going to trade,” Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC, told Reuters.
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