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Stock futures build on gains after rally

Stock futures opened higher on Monday after a rally earlier in the session, with volatility stemming from concerns about the Omicron variant at least momentarily abating. 

Contracts on the Dow extended gains. Earlier, the index ended higher by nearly 650 points, or 1.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, as cyclical names that had underperformed in the recent session rebounded strongly. The jump marked the Dow’s best day since March. 

More upbeat commentary suggesting the Omicron variant may not produce as severe of infections as previously feared helped boost markets. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), told CNN on Sunday that “thus far it does not look like there’s a great degree of severity” to the Omicron variant relative to prior mutations of the virus. 

The CBOE Volatility Index (^VIX) decreased to just over 28 on Monday as investors digested the remarks, bringing the so-called “fear gauge” down from its peak of more than 35 on Friday, or its highest level since January. 

“The level of volatility is somewhat logical here because a lot of this started prior to the Omicron variant really emerging. We knew that [Fed Chair Jerome] Powell was changing course in terms of his policy actions, he was speaking more hawkishly. Markets were already in the process of re-pricing a bit,” Jim Caron, Morgan Stanley Investment Management fixed income portfolio manager, told Yahoo Finance Live on Monday. 

“I know after Thanksgiving [news about Omicron] came out and that created a pretty big volatile event, but I think the initial conditions where valuations were pretty full, we knew the Fed was starting to change course and starting to tighten financial conditions a bit, and that’s going to mean that asset prices are going to have to reprice,” he added. “You start to get somewhat of a perfect storm when you add a health risk.”

Even amid the broad market rally on Monday, technology stocks were still the laggards, rising less than 1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} compared to the S&P 500 and Dow’s at least 1.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} gains during the session. 

Alongside concerns of the Omicron variant, investors have also been ascertaining when and how robustly the Federal Reserve will move to accelerate its asset-purchase tapering program and raise interest rates from their current near-zero levels as inflationary pressures continue to mount. On Friday, the Labor Department is set to release its November Consumer Price Index (CPI), which is expected to show the fastest year-over-year rise in core consumer prices since 1991, at a 4.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} annual gain. 

“Tech and growth stocks are the longest-duration assets, which means they’re going to be the most negatively impacted in valuation by any bump up in inflation which would take interest rates up,” Paul Meeks, portfolio manager for Independent Wealth Solutions Management, told Yahoo Finance Live. “But on the other hand, what the Fed is doing and is even talking about doing, which is going from accommodative to more restrictive monetary policy, is a known.”

“It is well-broadcasted,” he added. “So despite that and even despite Omicron … which I actually think is starting to look more transitory and a lot less of a threat than we had with COVID back in the spring of 2020, I’m starting to feel again … more sanguine about the tech sector.” 

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6:06 p.m. ET Monday: Stock futures open higher after rally 

Here were the main moves in markets in late trading on Monday: 

  • S&P 500 futures (ES=F): +4.75 points (+0.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 4,594.75

  • Dow futures (YM=F): +41 points (+0.12{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 35,253.00

  • Nasdaq futures (NQ=F): +9.5 points (+0.06{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 15,852.25

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 3, 2021. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 3, 2021. REUTERS/Brendan McDermid

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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Meta Nears Bear Market After $224 Billion Value Wipeout

(Bloomberg) — Facebook parent Meta Platforms Inc. dropped on Friday, bringing its shares closer to a bear market after months of volatility triggered by a whistle-blower’s revelations and disappointing quarterly results.

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The selloff was 19.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} since its closing record on Sept. 7, erasing about $224 billion in market value. Meta’s stock has been pressured this week as investors grappled with uncertainty surrounding the omicron variant and the possibility that the Federal Reserve will end its pandemic support program sooner than expected. It closed 1.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} lower to $306.84 on Friday, paring an earlier drop of as much 3.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.

Meta shares have been hurt in recent months by negative comments about Facebook’s business model from whistle-blower Frances Haugen, according to David Trainer, who covers Meta for investment research firm New Constructs. Haugen appeared before the House subcommittee on technology earlier this week, after accusing the social media giant of putting “profit over safety” of its users in October.

Mounting concerns about the impact of Apple Inc.’s data collection rules and supply-chain challenges have also contributed to the decline and spurred Meta’s biggest drop in nearly a year in October.

Meta shares fell 7.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} for the week, suffering their worst weekly decline since June 2020.

A weaker-than-expected quarterly report released in October also hurt investor sentiment. The company’s third-quarter revenues fell short of consensus estimates, as did its expectations for the fourth quarter. Several analysts trimmed their price targets for the stock in the wake of results, though they remained broadly positive on the firm, citing its long-term growth potential and valuation.

Prior to the pandemic-driven market rout last year, the company last entered a technical bear market in June 2019, when the U.S. Federal Trade Commission began an investigation into potential antitrust violations.

Still, the stock rallied through the pandemic and had been on a tear this year, rising 42{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from Jan. 4 to its Sept. 7 peak, outperforming peers like Twitter Inc. and Netflix Inc. But its recent plunge has the shares trading around 19.8 times forward earnings, making Meta the cheapest stock among mega-cap U.S. technology companies.

Newbridge Securities Chief Market Strategist Donald Selkin said Meta appears reasonably valued at current levels, with the decline discounting a lot of the bad news surrounding Facebook.

“It’s worth sticking your toe in the water,” he said in a phone interview.

The lower valuation doesn’t make the stock more attractive to Trainer of New Constructs, who views Meta as the worst positioned company among its mega-cap peers. He expects the stock to be a “perennial underperformer” for the next several years given the headwinds at the legacy Facebook business. Trainer said he is interested to monitor the company’s shift in focus toward the metaverse, especially the pace of the transition as competition in the field increases.

Yet, Meta has so far held on to its fans on Wall Street, with more than 80{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of analysts recommending that investors snap up shares, according to data compiled by Bloomberg. The stock’s 12-month average analyst price target of $400 implies about 31{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} return potential from current levels.

(Updates share price moves throughout and chart.)

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This should be stock market investors’ biggest concern, strategist says

Stock valuations are still looking too lofty even as the major indices continue to retrench on the one-two punch of Omicron variant fears and a hawkish shift in Federal Reserve policy.

“I worry about markets because stock market valuations look relatively high,” said Torsten Slok, Apollo Global Management chief economist, on Yahoo Finance Live. (Apollo is the parent company of Yahoo Finance.) 

Slok said the potential for interest rate hikes from the Fed in 2022 could be a headwind to markets, especially in light of valuations that aren’t too far removed from record highs. 

Added Slok, “I think the economy would still be OK [if the Fed raises rates next year], but I am actually quite worried about the vulnerabilities and the sensitivities simply because valuations are so stretched.”

Berkshire Hathaway’s Charlie Munger voiced similar concerns on Friday about stock valuations, noting they are “crazier” than the dot-com bubble. 

Indeed, air continues to be let out of what may be the near-term bubble in broader markets.

The Dow Jones Industrial Average (^DJI) fell 162 points in afternoon trading Friday, as the World Health Organization (WHO) reported the Omicron variant has now been found in 38 countries. All three major indices came under selling pressure, also not helped by a lower than expected 210,000 increase for November non-farm payrolls. 

Trading has been volatile to say the very least going back to a 1,010-point drubbing on the Dow the day after Thanksgiving.

The Dow tanked 652 points in Tuesday trading, while the Nasdaq Composite (^IXIC) and S&P 500 (^GSPC) were also deeply in the red. Tepid action persisted into Wednesday, with the Dow reversing a 520-point intraday gain to finish down 461 points. The Dow clawed back more than 600 points on Thursday in what is being seen by pros as a short-term relief rally. 

Most market pros say caution will be the name of the game right now. 

“It’s not the end of the world. These things are normal and they are healthy. But it will be a stock picker’s market, and people will have to be a lot more careful,” said Matt Maley, Miller Tabak chief markets strategist, on Yahoo Finance Live.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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Stock futures extend gains after S&P 500’s best day in seven weeks

Stock futures opened higher Thursday evening to hold gains after a recovery rally, with an initial wave of concerns over the economic impacts of the Omicron variant at least temporarily easing.

Contracts on the S&P 500 advanced. The blue-chip index closed higher by 1.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} during the regular session, marking its biggest jump since Oct. 14 Thursday. The Dow and Nasdaq each also advanced. Volatility from earlier this week retreated, and the CBOE Volatility index (^VIX) dipped 10{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to below 28. And travel stocks including airlines, hotel and lodging firms held onto earlier gains in late trading as traders bought the pullback in these virus-sensitive areas of the market. 

The move higher in stocks on Thursday came as market participants digested recent headlines on the Omicron variant, including the discovery of multiple cases in the U.S. While vaccine-makers and epidemiologists have still been assessing the new variant’s transmissibility and severity of infection, investors have at least temporarily eased back from peak levels of concern. 

“The markets … have been pricing in, really, a worst-case scenario,” Jim Smiegiel, SEI chief investment officer, told Yahoo Finance Live. “So obviously, there was a ton of uncertainty … [but] you’re seeing today some signs of positive outlooks coming into play. The cases that we’ve seen so far in the States have been mild.” 

“I think the market is now switching gears a little bit and perhaps lessening the intensity on the potential for negative outcomes,” he added. “The big issue still remains more about the world government’s reaction to the variant and what that means from a lockdown perspective. And that’s what the market is still kind of struggling with at this stage.” 

Others have struck an even more optimistic tone, suggesting the economic impact of the Omicron variant will ultimately prove less drastic than initially feared. 

“If you look back at Delta, there really wasn’t a meaningful impact in terms of actual consumption … maybe we saw a little bit of a shift away from services in the early stages of the reopen back towards goods, but overall consumption held up just fine,” Garrett Melson, Natixis Investment Managers Solutions portfolio strategist, told Yahoo Finance Live on Thursday.

“And on the capex front, we still see signs that companies are saying they’re going to invest in their businesses and they’re doing just that,” Melson added. “Lockdowns are certainly not happening here in the U.S. There’s no appetite from the government and certainly no appetite from consumers.” 

Traders are also awaiting the U.S. Labor Department’s latest monthly jobs report Friday morning. The November jobs report is expected to show another more than half a million payrolls returned last month, with the unemployment taking another step down to reach a March 2020 low of 4.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. The report comes following a slew of other positive data points on the labor market in recent days, with weekly unemployment claims coming in lower than expected, and ADP’s private payrolls report topping expectations on Wednesday.

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6:31 p.m. ET Thursday: Stock futures jump ahead of jobs report

Here were the main moves in markets during the overnight session:  

  • S&P 500 futures (ES=F): +11.5 points (+0.25{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 4,587.25

  • Dow futures (YM=F): +94 points (+0.27{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 34,716.00

  • Nasdaq futures (NQ=F): +34.50 points (+0.22{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 16,023.00

NEW YORK, NEW YORK - AUGUST 10: People walk by the Wall Street Bull near the New York Stock Exchange (NYSE) on August 10, 2021 in New York City. Markets were up in morning trading as investors look to a rare bipartisan effort in the Senate to pass a massive infrastructure bill that, if passed, will infuse billions into the American economy. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – AUGUST 10: People walk by the Wall Street Bull near the New York Stock Exchange (NYSE) on August 10, 2021 in New York City. Markets were up in morning trading as investors look to a rare bipartisan effort in the Senate to pass a massive infrastructure bill that, if passed, will infuse billions into the American economy. (Photo by Spencer Platt/Getty Images)

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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Oil prices have tanked so hard traders are assuming planes won’t fly for 3 months: Goldman Sachs

Oil prices have come down way too fast on Omicron variant concerns, says Goldman Sachs oil strategist Damien Courvalin.

In fact, the price correction is borderline comical, per Courvalin’s calculations. 

“The lack of discretionary buying activity in the face of an uncertain new COVID variant has therefore left prices in free-fall and pricing in a dire demand outlook. We estimate based on our pricing model, that the market has now priced in a mammoth c.7 mb/d [millions of barrels per day] negative demand hit over the next three months, with no offsetting OPEC+ response,” pointed out Courvalin in a new research note on Wednesday. 

Courvalin added, “To put this into context, this would represent any of these extreme outcomes: (1) not a single plane flying around the world for three months, or (2) half as intense as the 2Q20 global lockdown, or (3) a world even worst-off than before vaccinations: the combination of global jet demand falling to last winter’s level (-1 mb/d), a twice as large hit to EU demand as the Alpha variant last winter (-2 mb/d) and twice as large a hit to Chinese demand as the Delta variant this summer (-1 mb/d). The relatively parallel nature of the sell-off, with back-end prices down $7/bbl, could also be interpreted as the market pricing in a shallower but longer demand hit: a c.4 mb/d hit over 3 months with c.3mb/d of this a permanent impact offset by higher OPEC+ spare capacity.”

WTI crude oil prices have plunged 12{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} since Nov. 24 on worries the new variant will stunt global demand. As Yahoo Finance’s Jared Blikre notes, oil prices are now down about 23{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from their recent high.

Shares of oil majors Exxon and BP have shed 7.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and 9.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, respectively, in the last five sessions, according to Yahoo Finance Plus data.

The sell-off in oil comes amid a violent broader market pullback this past week, which continued on Tuesday. 

The Dow Jones Industrial Average plunged 652 points in Tuesday trading, while the Nasdaq Composite and S&P 500 were also deeply in the red. All 30 Dow components were in the red for the session, except for Apple and Merck.

Courvalin believes the steep pullback in oil prices is looking overdone.

“We view the move lower in prices as excessive but understandable in the context of low year-end liquidity and risk appetite. Given the large uncertainties at this time, we await further news on the variant’s development and additional restrictions imposed before refreshing our supply and demand balances and oil price forecasts, although again reiterate our view that the market has far overshot the likely impact of the latest variant on oil demand with the structural repricing higher due to the dramatic change in the oil supply reaction function still ahead of us,” Courvalin noted.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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Stock futures stage rebound after selloff

Stock futures opened higher Tuesday evening to recover some losses after a selloff earlier, when more hawkish remarks from Federal Reserve Chair Jerome Powell compounded with lingering uncertainty around the Omicron variant and its impacts on the economy. 

Contracts on the S&P 500 rose after the index closed lower by nearly 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} Tuesday afternoon. The S&P 500 closed out November with a monthly drop of 0.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, with volatility over the past week wiping out prior gains following the discovery of the Omicron variant. Still, the S&P 500 remained higher by nearly 22{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} for the year-to-date through Tuesday’s close. 

The Dow underperformed during the month, dropping 3.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November, while the Nasdaq eked out a monthly gain of 0.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. 

Some stocks, however, performed more strongly. Pfizer (PFE) shares closed out their best month since 1991 in November, jumping 23{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} as investors, faced with the new coronavirus variant, turned to vaccine-makers’ shares. Moderna (MRNA) shares rose 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November, though remarks from its CEO Stephane Bancel to the Financial Times saying that the company’s current COVID-19 vaccine would likely see a “material drop” in effectiveness against the Omicron variant sent the stock sharply lower during Tuesday’s session. 

This commentary, as well as ongoing uncertainty over the transmissibility and severity of disease caused by the new variant, also contributed to the broader market drop on Tuesday. 

“The market doesn’t like an information vacuum, and now we have two,” Thomas Hayes, Great Hill Capital Chairman, told Yahoo Finance Live. “Not only did we have the CEO of Moderna expressing concern that his vaccines may not have full coverage for Omicron, but then you had Powell throw this … wrench into the mix at the hearing saying that maybe we’ll speed up taper by a few months. That’s no small potatoes for sure, because the market had anticipated over six or seven months that we would get another $660 billion of liquidity.”

Namely, Powell told the Senate Banking Committee that it would be appropriate for the central bank to consider completing its asset-purchase tapering process “a few months sooner” than previously telegraphed. Market participants had been anticipating that the Fed might strike a more supportive stance for longer especially given concerns over the latest coronavirus variant. But instead, Powell suggested his priority was on curbing persistently elevated levels of inflation, and the Fed chair added it was “probably a good time retire” his description of inflation as “transitory.”

“Chairman Powell’s commentary course-corrected the view on inflation and the potential need for quicker policy adjustment,” Charlie Ripley, senior investment strategist for Allianz Investment Management, wrote in an email. “The reality is hotter inflation coupled with a strong economic backdrop could end the Fed’s bond buying program as early as the first quarter of next year.”

“Ultimately, the transitory view on inflation has officially come to an end as Powell’s comments reinforced the notion that elevated prices are likely to persist well into next year,” he added. “With potential changes in policy on the horizon, market participants should expect additional market volatility in this uncharted territory.” 

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6:15 p.m. ET Tuesday: Stock futures rebound 

Here were the main moves in markets as the overnight session kicked off: 

  • S&P 500 futures (ES=F): +22.25 points (+0.49{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 4,588.5

  • Dow futures (YM=F): +92 points (+0.27{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 34,549.00

  • Nasdaq futures (NQ=F): +93 points (+0.58{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 16,243.5

NEW YORK, NEW YORK - NOVEMBER 29: A trader works on the floor of the New York Stock Exchange (NYSE) at the start of trading on Monday following Friday’s steep decline in global stocks over fears of the new omicron Covid variant discovered in South Africa on November 29, 2021 in New York City. Stocks surged in morning trading as investors get more data on the new variant and reports that symptoms have so far been mild for those who have contracted it. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – NOVEMBER 29: A trader works on the floor of the New York Stock Exchange (NYSE) at the start of trading on Monday following Friday’s steep decline in global stocks over fears of the new omicron Covid variant discovered in South Africa on November 29, 2021 in New York City. Stocks surged in morning trading as investors get more data on the new variant and reports that symptoms have so far been mild for those who have contracted it. (Photo by Spencer Platt/Getty Images)

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter