Omicron is expected to hit the market. Why stocks look past the spread.



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There is no slowdown for Omicron, but there is also no slowdown in the stock market as the new year approaches. The two may not be as incompatible as they seem.

The stock market is expected to continue its end-of-year rally on Tuesday, with the


S&P 500

about to open to what would be a higher, while the


Dow Jones Industrial Average

and


Nasdaq

were also looking for higher openings.

The gains come even as Covid continues to spread rapidly. The seven-day average of cases more than doubled to 243,099 on Monday compared to two weeks ago, according to New York Times data, more than double the number from two weeks ago, and the chaos created by the Omicron variant continues to see overwhelmed hospitals, flight cancellations and other issues. For many economists, this is a sign that gross domestic product could take a hit, as in the third trimester due to the Delta variant.

Yet Omicron doesn’t appear to be Delta. Data continues to show that if Omicron spreads faster, it may be less virulent – hospitalizations are up 6% from two weeks ago, according to the New York Times, while deaths are down 5%. The government’s response to Omicron is also very different, with the Centers for Disease Control and Prevention now reducing the time required for quarantine to just five days in certain situations.

It is also hoped that Omicron will make people less susceptible to other variants, as suggested by a study from South Africa that has not been peer reviewed. Don’t overdo the survey – results are based on a small sample size and were already pushed back on Tuesday. But his conclusion would be good news if it turned out to be true.

The markets have been wrong before. They are a reflection of our collective view of the world at a given time. But they offer hope that Covid is not what it was even six months ago.

Ben levisohn

*** Barron’s is now accepting nominations for the third annual 100 Most Influential Women in American Finance. The deadline for submission is January 15, 2022. Apply here.

***

CDC Halves Covid Infections Isolation Recommendation

The Centers for Disease Control and Prevention has reduced the recommended isolation period for people with asymptomatic Covid-19 from 10 to five days, followed by five days of wearing masks around others. Most infections spread during the first two days before symptoms appear and two to three days after.

  • Fully vaccinated people who have received their booster shots do not need to self-isolate if they are exposed, but should always wear masks for 10 days and get tested five days after exposure. If symptoms do develop, they should self-isolate until they come back negative, the CDC said.

  • President Joe Biden offered to help states dealing with the surge in coronavirus cases and the widespread shortage of rapid home tests, telling the National Governors Association “we will support you anyway we can. “

  • New York City’s vaccination mandate, requiring all employers to verify that their workers in person have received at least one dose of the Covid-19 vaccine, entered into force on Monday. The weekly average of new cases in the United States is 198,405, up 65% from two weeks ago, according to data from Johns Hopkins University.

  • At least five Republican-led states– Arkansas, Florida, Iowa, Kansas and Tennessee – allow workers who have lost their jobs due to vaccination warrants from receive unemployment benefits. Critics say the benefits encourage people to avoid vaccines.

And after:


Apple

New York area stores are now only withdrawals, where people can pick up products purchased online but cannot enter to browse, a representative said Barron. Apple said it is monitoring conditions and adjusting health metrics and store services to support customers and employees.

Janet H. Cho

***

Omicron Focuses On Travel Industry As Flight Cancellations Continue

Omicron’s spread is straining the travel industry, with more than 1,400 flight cancellations to, from and within the United States on Monday nights after a weekend of delays and cancellations, and reported illnesses on cruise ships. Nearly 700 flights were canceled Tuesday morning.

  • Airlines canceled 3,200 flights over the Christmas weekend, according to data tracker FlightAware.


    Alaska Air Group

    canceled 22% of its Monday flights and delayed by an additional 35% after winter conditions caused flights to Seattle-Tacoma International Airport.


  • Microsoft

    became the last major tech company to pull out of in-person participation at January Consumer Electronics Show in Las Vegas, citing the increase in Covid cases.


    Twitter
    ,


    Amazon.com
    ,

    and


    Meta-platforms

    also bowed out.

  • The effect of Omicron on travel and tourism dented shares of casinos, such as those in Las Vegas


    MGM Resorts International
    ,

    which fell by 1.2%,


    Sands of Las Vegas
    ,

    which fell by almost 2%, and


    Wynn Resorts
    ,

    which fell by 1.5%.

  • A Holland America Line ship in Mexico was one of four ocean-going cruise ships diverted from ports during the weekend.


    Carnival

    -operated Holland said a “small number of fully vaccinated crew” tested positive with mild or no symptoms, but no passengers tested positive.

And after: Helane Becker, longtime airline analyst at Cowen, wrote in a research note that she expects a “slowdown in domestic leisure demand from January 4 through mid-February.” . After that, “We think we’ll see a recovery which should last all summer.”

Janet H. Cho

***

Moderna and J&J fight shareholder proposals on vaccine prices

Modern and


Johnson & johnson

are fighting shareholder proposals looking at how Covid vaccine makers factor in their billions of dollars in federal support when it comes to pricing their vaccines and making them available, especially for countries low and middle income.

  • Legal & General Investment Management America and Oxfam America and the Domini Impact Equity Fund have deposited two separate proposals at


    Modern
    ,

    and Oxfam has deposited one with J&J. The companies have applied to the Securities and Exchange Commission for permission to exclude them from proxies.

  • Legal & General said Moderna, which raised $ 2.5 billion in federal funds, shipped 88% of its doses to rich countries and has not shared its technology with manufacturers in low- and middle-income countries.

  • Oxfam said high-income countries administered 134 doses per 100 people, while low-income countries only administered four doses per 100, adding vaccine inequity could cost the global economy $ 2 trillion.

  • J&J partner Janssen has $ 2 billion in federal aid, according to Oxfam. Johnson & Johnson told the SEC that it is already providing details of its pricing and distribution policies and that it is committed to “Make sure people everywhere have access”.

And after: Modern plans to issue a statement find out if and how their federal support is taken into account in deciding access to their vaccine, including the price. He said the statement is expected to be released before February 15, 2022.

Liz Moyer

***

***

Make sure to participate in this month’s Barron’s Daily Virtual Stock Market Challenge and show us your stuff.

Each month we’ll be launching a new challenge and inviting newsletter readers, you!

Everyone will start with the same amount and can trade as often or as little as they want. We will follow the leaders and, at the end of the challenge, the winner with the most valuable portfolio will be announced in The Barron’s Daily newsletter.

Are you ready to compete? Join the challenge and choose your actions here.

—Newsletter edited by Liz Moyer, Joe Woelfel, Matt Bemer


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