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Business

Stocks Move Higher Ahead of Fed Meeting Today

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U.S. stocks posted strong gains ahead of a Federal Reserve announcement that is expected to provide more clarity on coming interest-rate increases—the prospect of which has spooked markets this year. 

The S&P 500 added 1.6% Wednesday. The broad index fell Tuesday and has declined in five of the past six trading days. The tech-focused Nasdaq Composite Index rose 2.2%, while the Dow Jones Industrial Average gained 1%, or about 343 points.

Stocks have been whipsawed in recent days by expectations that the Fed will embark on a series of rate increases this year to temper heightened inflation. The prospect of a shrinking balance sheet and higher rates has prompted some to sell risky assets, including shares of technology companies that promise future returns, and cryptocurrencies.

Economists expect the Fed to confirm expectations that it will start raising rates in March when it releases its statement at 2 p.m. ET. Traders in interest-rate futures markets are betting that the Fed will increase rates four or five times this year, according to CME Group.

The advance in markets comes after a rough start to the year. All three major indexes were down year-to-date as of Tuesday’s close, with the Nasdaq declining 13%.

Tech stocks lifted markets Wednesday, with the S&P’s tech sector recently up 2.5%.

Microsoft

shares rose 4.3% after the software giant said its earnings continued to grow as its cloud-services business stayed strong. Semiconductors also advanced:

Nvidia

rose 3.9%,

Micron Technology

added 2.8% and AMD gained 1.8%.

Investors are also monitoring rising tensions between Russia and Ukraine that have drawn the focus of NATO allies. Geopolitical turbulence has buoyed oil in recent days, pushing it to the highest levels since 2014.

“Today the focus is going to be on the Fed,” said

Luca Paolini,

chief strategist at Pictet Asset Management. “It’s more about the tone of the press conference. People may have an expectation that given the market turmoil and the geopolitical tensions, the Fed may tone down its rhetoric.” 

The VIX, a measure of expected volatility that is sometimes dubbed Wall Street’s fear gauge, ticked down 1.09 points to 30.07. The gauge has climbed this week as stock markets fell.

Technology shares led the upward turn in stocks Wednesday.



Photo:

Ted Shaffrey/Associated Press

Shares of

Mattel

gained 9.7% after The Wall Street Journal reported that it won the license to produce toys based on

Walt Disney’s

princess lineup, and from the “Frozen” franchise. 

Earnings season continues, with Tesla and

Intel

slated to report after markets close. Tesla shares added 2.3%.

In other stocks, shares of

Texas Instruments

gained 4% after the company reported higher revenue.

AT&T

shares fell 3.2% after the company swung to a profit as it improved its wireless revenue and shed the burden of its customer-losing pay-TV business in 2021. 

In bond markets, the yield on the benchmark 10-year Treasury note crept down to 1.783% Wednesday from 1.784% Tuesday. Yields move inversely to prices. 

Brent crude, the international oil benchmark, added 2.2% to $89.06 a barrel. It traded at hits highest levels since late 2014, with supply questions helping to push prices higher.

U.S. government bond yields influence the cost of borrowing, from mortgages to student loans. WSJ explains how they work and why they are so crucial to the economy. Photo illustration: Tom Grillo/WSJ

Overseas, the pan-continental Stoxx Europe 600 jumped 2%, with the biggest gains in the travel and leisure sector. Stock indexes in Asia closed mixed. China’s Shanghai Composite and Hong Kong’s Hang Seng added 0.7% and 0.2%, respectively. Japan’s Nikkei 225 and South Korea’s Kospi each declined 0.4%.

Bitcoin’s dollar value rose 3.7% from its 5 p.m. ET level Tuesday to $37,993. The world’s largest cryptocurrency by market value has recently sagged alongside broader markets, shedding nearly half its value from its November peak. 

—Hardika Singh contributed to this article.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

How the Biggest Companies Are Performing

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Business

Stocks Waver a Day After Hitting Record

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U.S. stock indexes were mixed Tuesday, a day after a record close for the S&P 500 amid lower liquidity in the last days of the year.

The S&P 500 swung between small gains and losses, touching a new intraday high in morning trading, after the broad-market index rallied 1.4% on Monday. It finished down 4.84 points, or 0.1%, to 4786.35. The Dow Jones Industrial Average rose 95.83 points, or 0.3%, to 36398.21. The Nasdaq Composite fell 89.5 points, or 0.6%, to 15781.72.

Stocks have been buffeted by the spread of the Omicron variant in recent weeks as governments around the world have imposed restrictions to try to curb coronavirus infections. But some recent studies have suggested the variant might result in milder illness with lower risk of hospitalization.

The Centers for Disease Control and Prevention reduced the recommended isolation period for some people who test positive to try to minimize disruptions. Still, many economists have lowered their forecasts for economic growth in the first quarter of next year.

“What is emanating from markets is the faith that Omicron won’t be able to disrupt the economic recovery,” said

Antonio Cavarero,

head of investments at Generali Insurance Asset Management. “There is no visible risk reduction.” That is partly due to lower liquidity from fewer people working around the holidays, he said.

Stock investors are keeping eyes on a phenomenon known as the “Santa Claus rally.” Indexes such as the S&P 500 have a tendency to rise in the last five days of the year and the first two days of the new year. Such a rally takes place at the end of about four of every five years, according to “Stock Trader’s Almanac.”

“It happens because people start positioning. People are reading everyone’s 2022 estimates and planning for next year,” said

Jeffrey Meyers,

a consultant to hedge funds and family offices at Market Securities.

Governments and policy advisers are showing signs of taking a lighter touch with policies regarding the rapidly spreading Omicron variant, reducing quarantine times and in some instances forgoing social-distancing restrictions as they try to keep economies moving. Vaccine makers gave up gains from earlier in the session, with

Novavax

declining 1.2% and

Moderna

down 2.2%.

The news has helped shares of travel and energy companies, with

United Airlines

up 1.6% and

Valero Energy

up 1.9%.

Cutting quarantine times is bullish for investors and prompting market participants to look beyond the Omicron surge, said

David Kotok,

chief investment officer at Cumberland Advisors. But it also risks allowing the Covid-19 virus to mutate, spread and disrupt economies, he added. He is overweight healthcare stocks.

“This ain’t over, and markets want to celebrate it being over. But the virus doesn’t care about what markets want,” Mr. Kotok said.

Oil prices ticked up, with global benchmark Brent crude climbing 0.4% to $78.94 a barrel.

The yield on the benchmark 10-year Treasury note was unchanged at 1.480%.

The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, showed U.S. home-price growth slowed in October. Shares of home builders edged higher during Tuesday’s session, with

D.R. Horton

advancing 0.7% and

Taylor Morrison

rising 0.8%.

U.S. companies will be entering 2022 at a very high level of corporate earnings, said Mr. Kotok. That will require companies to produce robust earnings growth next year, in the face of less fiscal and monetary policy stimulus.

“I’m a terrified bull,” he said.

Stocks have been buffeted by the spread of the Omicron variant in recent weeks.



Photo:

John Minchillo/Associated Press

Bitcoin slipped around 6.3% from its level at 5 p.m. ET on Monday, trading around $47,794. The cryptocurrency has oscillated around the $50,000 mark for the past five days.

Overseas, the pan-continental Stoxx Europe 600 added 0.6%.

The Turkish lira rose 1.3% to 11.8 to the dollar. The currency had strengthened after the government announced a new economic plan last week. President

Recep Tayyip Erdogan

“may have bought Turkey some time but it’s still not a great story,” Mr. Meyers said. Speculative investors likely closed out short positions ahead of the long holiday weekend and may now be putting them back on, weighing on the lira, he said.

In Asia, most major benchmarks rose. The Shanghai Composite Index climbed 0.4% and Hong Kong’s Hang Seng Index added 0.2%. Japan’s Nikkei 225 advanced 1.4%, led by gains in technology stocks.  

Shares of

China Evergrande Group

pared early gains bust still rose 3.8%. The heavily indebted real-estate developer said construction work had resumed at more than 90% of its stalled residential projects. It also said it was delivering apartments faster to home buyers.

Write to Sebastian Pellejero at sebastian.pellejero@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

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Business

Stock Market Today: Dow Rose as Moderna Slumped Again

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The


Dow Jones Industrial Average
had one of its best days this year on Monday, as value and defensive stocks led a rebound from last week’s market declines.

The news Monday was relatively positive, with signs that the Omicron variant of Covid-19 might be less severe than earlier strains and reports that China is considering easing monetary policy. On the Federal Reserve policy front, the latest reporting suggested that the central bank could announce plans at its next meeting to more quickly pull back from its bond-buying program.

The Dow surged 647 points, or 1.9%, for its best one-day point gain since November 2020 and the largest percentage increase since last March. The


S&P 500
closed up 1.2% and the Nasdaq Composite rose 0.9%, while the small-cap


Russell 2000
gained 2.1%, for its fourth-straight daily move of 2% or more.

Post-pandemic reopening stocks were among the biggest gainers on Monday. The


U.S. Global Jets
exchange-traded fund (ticker: JETS) added 5.3%, as


American Airlines Group

(AAL) added 7.9% and


United Airlines Holdings

(UAL) jumped 8.3%. Cruise lines


Carnival

(CCL) and


Royal Caribbean Cruises

(RCL) surged 8.0% and 8.3%, respectively.


Marriott International

(MAR) added 4.5%,


Live Nation Entertainment

(LYV) rose 6.1%, and


Cinemark Holdings

(CNK) gained 7.7%.

S&P 500 value stocks as a group gained 1.4% on Monday, versus a 0.9% rise for growth stocks in the index.

Investor attention remains focused on the newly discovered Omicron variant of coronavirus, news of which recently brought about the Dow’s worst day of the year and saw volatility rock markets last week. The latest headline driving sentiment comes from South Africa, where data—though from a small sample size—suggest that symptoms caused by Omicron were milder than with other variants.

Investors aren’t out of the woods yet, however. The broad market will remain sensitive to daily headlines about Omicron—both good and bad.

“It still feels like we’re in the guesswork stage of working out what the impact of Omicron will be,” said Russ Mould, an analyst at broker AJ Bell. “It would be naive to rule out further volatility as markets attempt to work out exactly what’s going on.”

On Monday, the news was positive and investors bought the market. All 11 S&P 500 sectors closed in the green.

Fed policy has been pushing investor sentiment the other way. Chair Jerome Powell indicated last week that the central bank would consider speeding up its slowing, or tapering, of monthly asset purchases, which add liquidity to markets, amid higher inflation.

“We’re really at a fascinating crossroads in markets at the moment,” said Jim Reid, a strategist at Deutsche Bank. “The market sentiment on the virus and the policy makers at the Fed are moving in opposite directions.”

Those trends mean different things for different kinds of stocks and indexes.

If Omicron is less severe than feared, then the economy might hold up better than expected. That would be good for economically-sensitive cyclical stocks, like many of those in the Dow. Higher bond yields and interest rates, however, can put downward pressure on stock valuations, particularly those with nosebleed price-to-earnings ratios, many of which are found in the Nasdaq.

“Like Friday, how the Nasdaq trades will likely determine the day, as markets want to see the tech sector stabilize after intense weakness late last week,” wrote the Sevens Report’s Tom Essaye. “If the Nasdaq can stabilize, the broad market can bounce.”

The tech-heavy index bounced from a loss of about 1% shortly after Monday’s opening bell.

In the commodity space, oil prices rose Monday after Saudi Arabia raised its January prices for Asian and U.S. customers over the weekend by $0.60, in a sign of firmer demand expectations.

Futures contracts for the international oil benchmark Brent rose 4.6%, to above $73 a barrel, with U.S. futures for West Texas Intermediate crude up 4.9% to about $69.50 a barrel.

“Given that OPEC+ is proceeding with its planned 400,000 barrels per day increase this month, it appears that Saudi Arabia is taking a punt that Omicron is a virus in a teacup,” said Jeffrey Halley, an analyst at broker Oanda. “Saudi Arabia’s confidence, along with the South African Omicron article over the weekend, is a boost to markets looking for good news in any corner they can find it.”

Cryptocurrency markets remained depressed after digital assets took a tumble over the weekend.


Bitcoin
and


Ether,
the two leading cryptos, remained off their lows following the stark fall Saturday, but were slipping after steadying Sunday. Bitcoin was trading hands around $49,000—down from more than $57,000 as recently as Friday—with Ether holding above $4,000.

Here are several stocks on the move Monday:


Nvidia

(ticker: NVDA) was among the most actively traded stocks in the U.S. Monday, closing down about 2.1%. Shares of fellow semiconductor firm Advanced Micro Devices (AMD) lost 3.4%.


Lucid Group

(LCID) stock dropped 5.1% after the electric-vehicle startup revealed that it had received a subpoena from the Securities and Exchange Commission, without offering many details.


Kohl’s

(KSS) gained 5.4% after an activist investor said it should explore selling itself.


Moderna

(MRNA) fell 13.5% after its president said that the risk that vaccines don’t work as well against Omicron is high. Pfizer (PFE) stock slid more than 5%.

Alibaba Group Holding (BABA) stock closed up 10.4% after a management shakeup at the e-commerce giant.


Deutsche Bank

(DB) rose 3.6% after JPMorgan upgraded the bank to Overweight from Neutral, adding that the group shows positive revenue developments in key divisions.

Pharma giant


Roche

(ROG.Switzerland) rose 1.5% in Zurich after announcing that it would release rapid antigen tests for Covid-19 and flu viruses next month.

Food delivery group


Just Eat Takeaway.com

(JET.U.K.) fell 4.9% in London following a price target cut and downgrade to Market Perform from Outperform by Bernstein, which sees few positive catalysts in the pipeline for the company.

Write to Jack Denton at jack.denton@dowjones.com

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World

Stock Market Today: Dow Bounces Back as Covid Variant Fears Ease

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The Omicron variant has prompted new travel restrictions around the world.


Joe Raedle/Getty Images

Stocks were rebounding Monday following Friday’s rout as vaccine makers said that they can adjust their Covid-19 vaccines to adequately immunize against the Omicron variant. 

In afternoon trading, the


Dow Jones Industrial Average
was up 320 points, or 0.9%, after the blue-chip benchmark plunged 905 points Friday. The


S&P 500
was up 1.6%, and the


Nasdaq Composite
advanced 2.1%. All three indexes notched their worst Black Friday on record at the end of last week, with the Dow suffering its worst day of the year. The last time the Nasdaq moved at least 2% on back-to-back days was March 8 and March 9 of this year.

“Keep in mind, while COVID continues to be a serious threat, we’re in a very different place than we were at the start of the pandemic in terms of medical advances and the strength of our economy,” wrote Chris Larkin, managing director of trading at ETrade. 


Pfizer

(ticker: PFE) said over the weekend it can adapt its vaccine to address the new variant within 6 weeks.


Moderna

(MRNA) said it could potentially roll out a reformulated vaccine by early 2022. Moderna stock was up 11% Monday, while Pfizer was down 1.2%.

It wasn’t just stocks that were signaling investor optimism. The 10-year Treasury yield rose to 1.53% from 1.48% at Friday’s close, a sign that that investors are moving out of safer assets and into risky ones. The price of WTI crude oil rose more than 4% to above $70 a barrel after having dropped more than 10% Friday. 

These are all good signs, but markets are still monitoring the Covid-19 situation. Just this month, new lockdowns in Europe were announced and the Omicron variant seems to be spreading globally. 

“Expect markets to remain choppy near term as we wait for further details on the new variant,” wrote Keith Lerner, co-chief investment officer at Truist. 

Overseas, London’s


FTSE 100
climbed 0.9%, rebounding from its largest one-day drop of 2021. In Asia, where markets closed before Friday’s selloff steepened, Hong Kong’s


Hang Seng Index
was 1% lower.

Here are five stocks on the move Monday:

Sectors that were slammed Friday—like travel—were generally higher, but most remained below levels seen before news of Omicron broke. Cruise operator


Carnival

(CCL) rose 1.5% initially, before that gain moderated to 0.4%. “I also would be buying travel/leisure stocks as if there is a mega trend that keeps bouncing back in the face of Covid,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group. 


Hyatt Hotels

(H) gained 4.2% after getting upgraded to Overweight from Neutral at JPMorgan.


TJX Cos.

(TJX) stock advanced 1.8% after getting upgraded to Buy from Neutral at Citigroup. 


Bumble

(BMBL) stock rose 3.5% after getting upgraded to Outperform from Market Perform at Raymond James. 


United Parcel Service

(UPS) stock dropped 0.4% after getting downgraded to Hold from Buy at Deutsche Bank. 

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Jack Denton at jack.denton@dowjones.com

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Sports

CCL revamped again; MLS, Liga MX expand Leagues Cup to all teams

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Concacaf, MLS and Liga MX on Tuesday afternoon unveiled a new club competition structure that will reshape men’s professional soccer across the region and especially in the U.S., Canada and Mexico.

The revised Concacaf Champions League format and enlarged, inclusive Leagues Cup tournament, which will feature every MLS and Liga MX team, supplant the previous overhaul unveiled in early February. The modified competitions will kick off in 2023-24.

The current CCL is a 16-team, bracketed competition. It was supposed to make way for a massive 50-team event in the fall of 2023 that would begin with 10 regionalized groups, including four covering the three North American nations. But that plan has now been scrapped in favor of a more streamlined 27-club, bracketed tournament featuring 18 North American entrants to be played for the first time in the spring of 2024.

“Fans want to see knockout situations,” Concacaf president Victor Montagliani said Tuesday.

Orlando Ramirez/USA Today Sports

MLS will furnish five U.S.-based teams based on league results, and a sixth American side will qualify via the U.S. Open Cup. Liga MX will send six clubs, and there will now be three bids awarded to Canadian teams—one through the Canadian Championship and two via the Canadian Premier League. Three additional spots then will be granted to the top three finishers in the expanded Leagues Cup, the MLS-Liga MX tournament that, from 2023, will involve all 47 members of the region’s top two domestic circuits.

Launched in 2019 as part of the competitive partnership between MLS and Liga MX, the Leagues Cup has been an underwhelming, eight-team knockout event with inconsistent qualifying criteria and minimal stakes. The 2021 edition, its second following last year’s cancellation, will conclude with Wednesday night’s final between the Seattle Sounders and Club León.

In 2023, however, it will grow exponentially and become a tentpole fixture on the North American calendar. MLS and Liga MX will pause their campaigns starting in late July/early August so all 47 members (48 once MLS reaches 30 clubs) can focus on the Leagues Cup.

Kelvin Kuo/USA TODAY Sports

There are still several unknown details, but it’s understood that the new Leagues Cup format will comprise a group stage followed by knockout rounds (eventually 16 groups of three feeding a single-elimination round of 32), with prize money increasing as the competition progresses. It will continue to be staged in the U.S. and Canada, at least in the near term, and will qualify three clubs to the new CCL. Among the unannounced or unresolved issues: It’s unclear how the cup will be seeded/bracketed, whether there will be a third-place game or how eliminated teams will spend the remainder of the Leagues Cup break.

“It’s a much more authentic and official format,” MLS commissioner Don Garber said.

The reigning MLS Cup winner will continue to play its Liga MX counterpart in the one-off Campeones Cup (this year’s features the Columbus Crew and Cruz Azul on Sept. 29), and MLS teams also will continue to participate in the U.S. Open Cup, which will resume in 2022 following a two-year hiatus.

The remainder of the 27-team CCL field will be filled out by clubs from Central America and the Caribbean. A new Central American tournament will furnish six clubs and an additional three will book passage from the Caribbean. Five teams—the champions of MLS, Liga MX (one of the two crowned each year), Leagues Cup, Central America and the Caribbean—will earn byes to the CCL’s round of 16. The other 22 will contest a home-and-home opening round.

The 2022 and 2023 CCLs will be played as traditional 16-team events featuring four U.S.-based MLS teams yet to be determined plus the Canadian Championship winner. The 2021 edition will be decided by Club América and host Monterrey on Oct. 28.

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