Big Tech, chipmakers power Nasdaq as Omicron worries subside; Dow up 1.3%

The Nasdaq rallied more than 2% on Tuesday as technology firms bounced back on easing concerns around the Omicron variant, while Intel jumped after plans to take its self-driving car unit public.

Investors cheered the chip giant’s decision to list Mobileye in the United States in mid-2022, sending its shares 5.0% higher. The Philadelphia SE Semiconductor index surged 3.5%, bouncing off a near one-month low hit in the previous session.

Ten of 11 major S&P sectors advanced in early trading, with the information technology sector, which houses companies like Visa Inc, Mastercard Inc, Salesforce.com and Apple Inc, gaining 2.5%.

Wall Street’s main indexes closed higher on Monday as optimistic comments from a top U.S. official about Omicron encouraged investors. The CBOE volatility index, too, eased from a 10-month high hit last week, when fears around the new virus strain and the Federal Reserve’s hawkish comments rattled investors.

“With yesterday’s rally, investors are starting to get their minds around the fact that the Fed is likely tapering for the right reasons,” said Art Hogan, chief market strategist at National Securities in New York.

“And the second thing is that there’s been a diminishing economic impact of every new variant of the coronavirus since the pandemic began.”

High-flying growth names including Nvidia and Tesla were battered in recent days as investors rotated into sectors like energy, banks on expectations that the Federal Reserve will tighten monetary policy quicker to curb surging inflation.

U.S. bank executives raised concerns about the impact of a sustained period of higher inflation, adding to pressure on the Fed to accelerate plans to slow down the pace of its asset purchases.

Other mega-cap tech stocks Google-owner Alphabet, Microsoft and Amazon gained between 1.9% and 2.1%, helping the Nasdaq outperform its peers.

Tesla Inc added 3.4% after dropping into bear market territory, or 20% off its record high close, on an intraday basis on Monday.

At 9:52 a.m. ET, the Dow Jones Industrial Average was up 439.49 points, or 1.25%, at 35,666.52, the S&P 500 was up 78.04 points, or 1.70%, at 4,669.71, and the Nasdaq Composite was up 361.97 points, or 2.38%, at 15,587.12.

Shares of Vir Biotechnology jumped 3.9% after British drugmaker GSK said an antibody-based COVID-19 therapy it is developing with Vir is effective against all mutations of the Omicron variant.

Travel shares continued the momentum, with the S&P 1500 Airlines and the S&P 1500 Hotels, Restaurant and Leisure indexes rising 1.7% and 2.2% respectively.

American Airlines added 2.4% after the carrier announced the retirement of Chief Executive Officer Doug Parker.

Merck & Co fell 1.9% as Guggenheim downgraded the stock to “neutral” from “buy” after the drugmaker paused enrollment in two late-stage clinical trials testing its experimental drug for treatment and prevention of HIV-1.

Advancing issues outnumbered decliners by a 8.59-to-1 ratio on the NYSE and a 6.42-to-1 ratio on the Nasdaq.

The S&P index recorded 25 new 52-week highs and no new low, while the Nasdaq recorded 25 new highs and 17 new lows.

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