The stock market started off the new year on a high note Monday, rising slightly as investors bet the U.S. economic recovery will continue despite a surge in Covid cases over the holiday season.
The Dow Jones Industrial Average rose 0.3%, around 100 points, while the S&P 500 gained 0.3% and the Nasdaq Composite 0.5%.
Stocks usually rally in the first week of a new year, according to a note from Bank of America, with the index posting an average gain of about 1.6% and rising 11 out of the last 13 calendar years.
Electric car maker Tesla added to momentum with its shares rising over 9% in early trading after the company said it delivered 308,600 vehicles in the fourth quarter—well above analyst expectations.
Shares of legacy automakers also rose slightly, with Ford and General Motors each gaining 2% or more.
Stocks tied to the reopening of the economy—namely, airlines, which have struggled with thousands of flight cancellations over the holidays due to surging coronavirus cases—rose slightly on Monday as investors shrugged off concerns.
Delta and United Airlines both rose around 3%, while other reopening stocks like casino operators Las Vegas Sands and Wynn Resorts also jumped more than 2%.
Monday’s moves come after the stock market closed out a stellar year last week. The S&P 500 rose nearly 27% in 2021, while the Dow and Nasdaq gained around 19% and 21%, respectively.
“It’s a new year, but things look a lot now like they looked in 2022 with markets in rally mode and COVID cases continuing to surge,” said Bespoke Investment Group in a recent note.
What To Watch For:
There will be ongoing uncertainty around coronavirus cases and the fast-spreading omicron variant. A surge in cases over the holiday season led to thousands of flight cancellations, with some businesses and schools considering temporary shutdowns. High inflation levels will also dominate market discourse in 2022, as investors expect the Federal Reserve to continue shifting its monetary policy and raise interest rates several times this year in a bid to fight rising prices.