Markets remained driven by Omicron variant-related news and its economic implications, as well as forecasts of faster tapering and earlier rate hikes. The week saw the kind of volatility that day traders crave US stock indexes ended the week falling with the Nasdaq hit the hardest, down close to 300 points or 1.92%.
During the week, the oil, industrials, real estate, and financials sectors had led a broad recovery bounce back from previous sessions with investors taking advantage of the drop to buy cyclical companies connected to the economic recovery.
Initial jobless claims were fewer than expected at 222,000, while Friday’s November jobs report saw 210,000 jobs added. Looking past the headline number which was lower than hoped, analysts took it as positive that recovery from the depths of the pandemic was still on track. However, with mounting Omicron cases and a less lenient Fed, the picture is becoming increasingly bleak.
There are mixed forecasts for future inflation and US Treasury Notes rates maintained their gains from the previous sessions as some Fed members argued for speedier removal of policy support due to strong inflation. In Europe, Christine Lagarde of the European Central Bank President indicated inflation would fall in 2022.
OPEC+ responded to US political pressure and agreed to increase output however, until the M0 money supply changes, inflationary pressures will remain. Remember, oil, gold and price increases in general are a symptom not the cause of inflation. The easy narratives about the causes of inflation aren’t always accurate so, as always, do your own research.
US Stock Market News
Following an Omicron-driven sell-off the previous session, stocks rallied dramatically on Thursday, with cyclical names recouping some of their recent losses. Thursday’s session saw the Dow Jones Industrial Average rise 617.75 points to 34,639.79, thanks to a 7.5 percent increase in Boeing’s stock.
After the mid-week sell-off, recoveries were seen in airline, casino, and energy stocks. Delta Air Lines increased by 9.3%, MGM Resorts increased by about 7.7%, and Hilton Worldwide increased by 7.4%. Norwegian Cruise Line increased by 7.7%, while Wynn Resorts increased by approximately 8.2%. Occidental Petroleum and Baker Hughes increased their stock by 2.4 percent and 2.5 percent, respectively.
Ulta Beauty Down
In pre-market trade on Friday, Ulta Beauty (NASDAQ: ULTA) had been up more than 5% after the cosmetics business boosted its fiscal year sales target. Ulta (ULTA) forecasted net revenues of $8.5 billion to $8.6 billion, with comparable-store sales growth of 36 percent to 37 percent. However, in line with the rest of the market, the stock fell back and finished down nearly 2%.
The business originally predicted net sales of $8.1 billion to $8.3 billion for the fiscal year, with comparable-store sales growth of up to 32 percent.
DocuSign Hit Hard – Too Big Too Soon?
DocuSign’s (NASDAQ: DOCU) stock dropped over 40% on Friday after the e-signature software maker issued a prediction for the rest of the year that fell short of analysts’ expectations.
According to the release of its third-quarter results, DocuSign’s fourth-quarter revenue is expected to be between $557 million and $563 million. Analysts predicted revenue of $573.8 million on average.
US Gold Market
Gold and gold stocks found support after the recent falls. Investors are weighing the attractiveness of the metal as a inflationary hedge against the US Federal Reserve officials effectiveness in managing rates and tapering. After hitting its lowest level in nearly a month on Thursday, spot gold ended the week just above $1780 having seen December futures find support between $1770 and $1780.
US Oil Market
The Organization of Petroleum Exporting Countries (OPEC), Russia, and their allies, collectively known as OPEC+, warned it will evaluate supply additions ahead of its next planned meeting if the Omicron variant dampens demand, although prices fell for the fifth week.
On Thursday, OPEC+ stunned the market by sticking to its intentions to increase 400,000 barrels per day (BPD) of production in January. However, the producers left the door open to quickly, modifying policy if demand was harmed due to the Omicron coronavirus variant’s proliferation.
January is the front month futures contract, it closed the week at $66.22 while the March contract for Brent oil which is traded on the ICE futures exchange finished at $69.58.