US stocks recover some variant lost ground

The US stock and oil markets took a more measured view of the latest coronavirus variant on Monday — rebounding after Friday's major selloff on the news — as President Joe Biden said that new lockdowns were not planned.

Biden said that Omicron variant-related lockdowns were not being considered, adding that the virus strain was "a cause for concern, not a cause for panic".

"It's not like the start of the pandemic all over again," said Carol Schleif, deputy chief investment officer for the BMO family office in Minneapolis. "People are willing to just take a deep breath and try to reassess, be a little more patient."

"Friday was a panic selloff," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told The Wall Street Journal. "Traders have had time to sit back and breathe a bit."

Vaccine makers such as Pfizer, its European partner BioNTech, and their rivals Moderna and Johnson & Johnson said Monday they are working on vaccines that target Omicron in case their existing shots are not effective against the variant.

Moderna shares jumped 11.8 percent Monday. The biotech company's stock had soared more than 20 percent Friday after it said it was working to rapidly advance an Omicron-specific booster. US-listed shares of BioNTech rose 4.2 percent Monday.

The Dow Jones Industrial Average rebounded to 35,135.94, up 236.6 points, or 0.68 percent. The S&P 500 finished at 4655.27, up 60.65, or 1.32 percent. The Nasdaq Composite Index jumped 291.18 points, to 15,782.83, a gain of 1.88 percent.

Among the S&P's 11 major sectors, technology was the leader. Amazon.com and Tesla rose, helping to boost the consumer discretionary sector.

The Dow underperformed the other major indices, as Merck extended losses from Friday. Updated data from a study of its experimental COVID-19 pill showed lower efficacy in reducing risk of hospitalization and deaths than previously reported.

Twitter shares lost ground after the social media giant said CEO Jack Dorsey will step down. Chief Technology Officer Parag Agrawal will succeed Dorsey.

"I'm really sad ... yet really happy," Dorsey, also the CEO of digital payments firm Square Inc wrote to Twitter staff in an email. "There aren't many companies that get to this level," he said, adding that his move to step down "was my decision and I own it".

The closely watched oil market seems determined to march higher in the face of the latest wrinkle in the COVID-19 pandemic.

West Texas Intermediate crude oil jumped as much as 6.74 percent to $72.74 per barrel. Brent crude, the international benchmark, rose as much as 5.65 percent to $76.83 per barrel. Both had fallen more than 10 percent Friday, in their largest one-day percentage decline since April 2020, early in the pandemic.

Higher oil prices are here to stay, according to JPMorgan, with the bank estimating that Brent prices could hit $150 a barrel in 2023, as the OPEC+ cartel controls supply and protects higher prices.

The Biden administration's release of 50 million barrels from the strategic petroleum reserves appears to have had little impact on the oil price.

"We believe the market may overestimate the impacts of the recent emergence of the Omicron variant of COVID-19 on oil prices during the US holiday period," JPMorgan said in a note Monday.

With OPEC+ "being firmly in the driver's seat for oil prices", JPMorgan forecasts Brent will hit $120 a barrel in 2022 and possibly $150 in 2023.

Those numbers would not be welcome to consumers, who already are dealing with inflated food and energy costs.

"The recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity, and increased uncertainty for inflation," said Federal Reserve Chairman Jerome Powell in remarks released Monday ahead of his testimony scheduled for Tuesday before the Senate Banking Committee.

"Greater concerns about the virus could reduce people's willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions," Powell said.

"Omicron reinforces that the economy remains tethered to the pandemic," Mark Zandi, chief economist at Moody's Analytics, wrote on Twitter. "With each new wave of the pandemic, the economy will suffer slower growth and higher inflation.''

For the third straight week, the nation's average gasoline price has fallen, dropping 3.4 cents from a week ago; it stood at $3.379 per gallon Monday, according to price-tracking website GasBuddy. Still, the national average is up 2.8 cents from a month ago and $1.30 per gallon higher than a year ago.

"Beyond the next few weeks, it remains nearly impossible to predict where oil and gas prices will head, though turbulence is guaranteed," said Patrick De Haan, head of petroleum analysis for GasBuddy.

Bitcoin bounced back Monday after the largest cryptocurrency was pounded in Friday's selloff. Bitcoin rose 3 percent from its 5 pm ET level Sunday to around $58,000.

Investors sold off US government bonds; the 10-year Treasury rose 1.521 percent from 1.484 percent Friday.

Tokyo's Nikkei 225 index dropped 1.6 percent to its lowest closing level in a month and a half after falling 2.5 percent Friday. Hong Kong's Hang Seng and South Korea's Kospi fell around 1 percent apiece.

Reuters contributed to this story.