Despite the increased volatility caused by the additional risk posed by the Omicron variant in recent weeks, the S&P 500 gave the gift of a new all time high on Christmas Eve, Eve. Critical new information continues to emerge about this new variant, including that it seems by far the most contagious of the Covid-19 strains, but may cause a lower rate of severe illness. Also, newly approved treatments, such as Paxlovid, offer promise to help lower hospital admissions and lengths of stay. On net, nominal economic growth expectations recovered, roughly in line with the rise in 10 year Treasury yields.
There is still much to learn about the Omicron variant, but thus far, I’m happy to be sticking to my previous estimated range of 5300-to-5800 for the S&P 500 by the end of 2022, and I still favor the higher end of that range.
Retail sales news related to Christmas spending should continue flowing in this week, with numbers so far indicating better-than-expected results. We could well end this year on a high note. This shouldn’t obscure the fact that there’s still the potential for negative news about Omicron, and the emergence of new strains next year. Despite my relative optimism, we still live in a riskier world than before the pandemic.
Note: This post, as is the case with all my posts, should not be construed as offering investment advice. Such advice should be tailored to the individual investor by qualified professionals who, ideally, are fiduciaries.
Links to Data:
https://www.marketwatch.com/investing/future/sp%20500%20futures
https://www.cnbc.com/quotes/.VIX https://fred.stlouisfed.org/graph/?g=Ee9i
https://www.cmegroup.com/trading/agricultural/commodity-index/bloomberg-commodity-index.html https://www.cnbc.com/quotes/@CL.1
https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude_quotes_globex.html