Shares reach new highs even as Covid variant spreads


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A Covid-19 test location at Los Angeles International Airport.

AFP via Getty Images

Undeterred by Omicron, stocks hit new highs last week.

After a setback on Monday, the

S&P 500 Index

climbed to a record high of 4,725.79 at Thursday’s close, ending the four-day week with a gain of 2.3%. the

Dow Jones Industrial Average

gained 1.7%, while the

Nasdaq composite

increased by 3.2%.

Towards the end of a year when the death toll from Covid-19 topped 800,000, investors maintained their focus on a recovery that has pushed the S&P 500 up nearly 26% since the start of January. The benchmark index has almost doubled since 2018.

As Omicron becomes the dominant variant of new Covid infections, investors have welcomed growing evidence that it is contagious but less serious than previous strains, if you’ve been vaccinated. Infections from the fast-growing coronavirus have apparently peaked in their South African hotspot.

“[A]All the data continue to show that Omicron is much less dangerous than previous waves despite its extreme transmissibility, “write the folks at Bespoke Investment Group,” with negligible threats to people vaccinated or previously infected, and very short epidemic curves. that run out quickly. President Joe Biden’s plan to distribute the newly licensed antiviral pills of


(ticker: PFE) and


(MRK) should prevent a repeat of last year’s hospital overflows.

The market deserves to be celebrated. Covid has brought death and dislocation, but we tend to pay too much attention to what didn’t happen. If vaccines had not changed the trajectory of the pandemic, the United States would have suffered nearly 1.1 million more deaths and 10 million more hospitalizations, according to a Commonwealth Fund epidemiological model cited last week in the Journal of the American Medical Association.

That’s not to say that Omicron isn’t rolling back large swathes of the economy. Professional hockey is on hiatus. The professional football and basketball leagues have postponed the games. Broadway has turned dark. But there has been some compensation – in a lonely way – with the flood of content created by streaming services in 2021. Entertainment giants like



Walt disney

(DIS), and


(NFLIX) has increased its production spending by 20% this year, to nearly $ 50 billion, notes Guggenheim analyst Michael Morris. New “over the top” subscription services, such as


(APPL), contributed more than $ 8 billion in new content this year.

While Big Tech filled our evenings, it also dominated the trading hours. Despite some loss of ground lately, a handful of big names like

You’re here

(TSLA) and


(NVDA) contributed a third of the S&P 500’s gains this year. The bull market has been unusually tight this year, as measured by the width indicators.

Credit Suisse U.S. equity strategist Jonathan Golub notes that the universe of evenly weighted tech stocks has grown only about 14% in the past 12 months. Compare that with the 32% gain seen by megacaps once known as FAANG, which have now turned into GAMMA shares:


(GOOGL), apple,




(FB), and

(AMZN). GAMMAs have seen strong growth in sales and returns on equity, but also much higher valuations. The index increase provided by these giants made passive investors feel bright and active stock pickers feel dumb.

Monday’s market decline was particularly marked for the environment sector. Indeed, Senator Joe Manchin (D., W.Va.) refusal to support the Build Back Better Act casts a shadow over industries that expected increases of some $ 550 billion in energy subsidies. green and tax incentives.

The coup reversed as the manufacturers of solar electronics

SolarEdge Technologies

(SEDG) and

Enphase Energy

(ENPH), as well as the solar installer


(RUN), which were already unstable after California regulators proposed changes to the state’s solar energy economy. But panel manufacturer

First solar

(FSLR) fell enough on Monday for Evercore ISI’s Sean Morgan to call it “tactical outperformance”, even though he has long-term concerns about competition from Chinese manufacturers.

Call it yet another ray of hope in a year full of them.

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Write to Bill Alpert at [email protected]


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