S&P 500 hits record after holidays, but airline shares slide following Covid cancellations

U.S. stock indexes rose Monday as markets reopened after the Christmas holiday and investors assessed the spread of the omicron Covid-19 variant.

The S&P 500 hit an intraday record and gained 0.7%. The Dow Jones Industrial Average added about 140 points, or 0.4%. The Nasdaq Composite ticked up 0.8%.

Airline stocks fell after a holiday weekend that saw thousands of flights canceled due to Covid-related issues. The rampant spread of the omicron variant led to a staffing shortage at a time when airlines were looking to ramp up their schedules to meet high travel demand.

Delta Air Lines lost 1.7%, United Airlines dipped 1.6% and American Airlines fell 1.9%.

Cruise line shares also retreated after Covid outbreaks on ships. Royal Caribbean slid 2.6%, Carnival fell 2.2% and Norwegian Cruise Line dipped 3.2%.

However, market strategists remained positive on the overall equity outlook amid the surge in Covid cases. New studies suggest that omicron has a lower risk of hospitalization than other Covid variants.

“We do not expect Omicron to impact the growth outlook in any significant way, but rather it is likely to accelerate the end of the pandemic,” JPMorgan’s Dubravko Lakos-Bujas said in a note Monday.

U.S. infectious disease expert Dr. Anthony Fauci said Sunday that cases of Covid-19 are likely going to keep surging as the omicron variant rapidly spreads across the globe. Fauci warned against getting complacent.

“Every day it goes up and up. The last weekly average was about 150,000 and it likely will go much higher,” Fauci said on ABC’s “This Week.”

Holiday sales rose 8.5% in 2021 from last year, the fastest pace in 17 years, according to Mastercard data. The results came despite a backdrop of supply chain disruptions, higher prices and the omicron variant in the last few weeks of shopping.

Elsewhere, shares of GoDaddy jumped more than 7% after reports that activist investor Starboard Value LP took a 6.5% stake in the domain registrar.

Nine out of 11 S&P 500 sectors gained in Monday’s session, save for real estate and utilities.

Investors are looking for a Santa Claus rally to close out a year in which the S&P 500 has gained more than 26%.

The benchmark index historically gains during the Santa Claus rally period — the final five trading days of the current year and the first two of the new year.

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—CNBC’s Jessica Bursztynsky and Maggie Fitzgerald contributed to this article.

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