Stocks To Add To Win Streak As Investors Appear More Comfortable With Omicron Data

 | Dec 23, 2021 10:24AM ET

Today, will be a lightly traded day because many investors will be getting an early start on their holiday celebrations. Traders looking to get into any market action today should be careful with the lower volumes and consider taking smaller positions and scaling in for better pricing.

According to Barron’s, the news and data around the Omicron variant is slow but increasingly positive. A study by South Africa’s National Institute of Communicable Diseases found that people infected with the Omicron variant were 70% to 80% less likely to be hospitalized than those infected with the Delta variant. Additionally, Novavax (NASDAQ:NVAX) and AstraZeneca (NASDAQ:AZN) both reported that their boosters were effective against the Omicron variant.

The developments are helping stocks like Norwegian Cruise Line (NYSE:NCLH), which was 2.52% higher in premarket trading. Additionally, Delta Air Lines (NYSE:DAL) was up 1.23% and Las Vegas Sands (NYSE:LVS) was up 4.40%. Investors appear to be increasingly more comfortable with the idea that Omicron isn’t as dangerous as other variants and that travellers are willing to live with the risks.

Despite the increasingly positive sentiment, Omicron is still causing issues. Apple (NASDAQ:AAPL) announced it was temporarily closing eight stores due to the spread of the virus. As people gather for the holiday weekend, it’s likely Omicron will spread, and cases will rise in the United States, but hopefully the cases will be milder like South Africa has experienced so far.

In merger and acquisition news, Quidel (NASDAQ:QDEL) was trading 13.46% lower in premarket trading on news that the company is acquiring Ortho Clinical Diagnostics (NASDAQ:OCDX) for approximately $6 billion in cash and stocks. Ortho was up 7.88% before the bell.

Some positive economic news was reported this morning with durables goods orders slightly better than forecasted. However, the Core PCE Price Index saw inflation grow at a faster pace than expected. In fact, personal incomes came in higher, but when adjusted for income they were flat. The 10-year Treasury yield was up before the news but saw a slight drop after the reports.

Hopefully, the positive momentum can last into next week as investors look for the much discussed Santa Claus rally .

In Tuesday’s trading, consumer discretionary was the top-performing sector on a day when all sectors finished in the green. The sector was helped by home-building and automobile stocks. After the open, the existing home sales report showed lower-than-expected sales because of the lack of inventory. Therefore, demand remains strong, and home-builders are playing catch up. The S&P Homebuilders Select Industry closed 1.53% higher on the day.

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Stocks were able to build on Tuesday’s rally as the S&P 500 rose 1.02% and now sits about 0.50% from its all-time high. Technology stocks were the second-highest performer on Wednesday and pulled the tech-heavy Nasdaq Composite up 1.18%.

Small-cap stocks also rose but underperformed the major indices as the Russell 2000 Index rallied 0.86% on the day. The index has climbed more than 5% from its low three days ago, when the index tested support. If the Russell 2000 were to move back to resistance, it would have to rally another 6%.

The Energy Select Sector Index only rose 0.56% on Wednesday despite a 2.69% rally in oil prices. Oil prices sold off hard on Monday but rallied through the day. The commodity has put together a two-day win streak of more than 10% from Monday’s low to Wednesday’s close.

Despite the rise in oil prices, the 10-year Treasury yield traded more than 2% lower on Wednesday. While financials were higher on the day, the drop in yields likely weighed the sector down.

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Paychex (NASDAQ:PAYX), Cintas (NASDAQ:CTAS) and CarMax (NYSE:KMX) announced better-than-expected earnings and revenue for their previous quarter. However, only Paychex rallied on the news, climbing 5.52%. The payroll and HR specialist grew sales by 13% and has been successful in getting companies the help they need to get through the pandemic with its Flex (NASDAQ:FLEX) digital platform.

Uniform rental company Cintas fell 1.81%, despite its ability to pass on higher costs to its customers. Cintas was able to adjust during the pandemic and offer health care and sanitation services to its customers, which helped the company grow sales over the last two years. Cintas did raise its outlook but offered uncertainty around COVID-19 because of the lack of the unpredictable nature of the Omicron variant.

CarMax fell 6.66% even though it grew revenue 65% from a year ago. Despite the revenue growth, earnings only grew 15% in the same time frame. Investors may be thinking that CarMax benefited from consumers looking for vehicles online during COVID-19 lockdown and that those conditions aren’t likely to repeat in 2022 because President Joe Biden ruled out lockdowns as part of the countries battle against the Omicron variant.

Despite CarMax possibly seeing a slowdown in sales in the near future, the automobile industry had the best day of all industry groups. The Dow Jones U.S. Automobile Index rallied 6.40%.

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Electric vehicle maker Tesla (NASDAQ:TSLA) helped drive the rally in automobile stocks, which rose nearly 7.5% on the day. The rally was prompted by company President Elon Musk announcing that he was done selling shares during an interview with the satirical news site The Babylon Bee.

Musk said he sold enough shares to reach his goal of unloading 10% of his stake in the company to meet tax liabilities associated with the options expiration. According to the Securities and Exchange Commission filings, Musk has sold 583,611 shares. Tesla shares have fallen about 23% during this time.