Tech rally lifts Wall Street from Omicron-driven slump; Dow up 129 pts

Travel, energy stocks bounce from recent lows; Nasdaq leads gains, tech demand seen strong

Gains in heavyweight technology stocks drove Wall Street indexes higher on Monday as investors rushed to take advantage of steep virus-driven losses, with Twitter up on reports that chief Jack Dorsey is expected to step down.

The S&P technology and the communication services subindexes jumped more than 1% each, indicating that investors were likely favoring pandemic-resistant technology stocks amid growing fears of the newly discovered Omicron variant.

The S&P 500 energy index jumped 3% in early trade and was the best performer among its peers, as oil prices rebounded from Friday's sell-off. A recovery in Treasury yields also pushed the banks index 0.8% higher.

Twitter Inc surged as much as 11% after reports said Dorsey intended to step down. Dorsey had faced some pressure in 2020 to step down over allegations that he was paying too little attention to Twitter while also running payments processing company Square Inc.

Wall Street indexes had slumped between 2.0% and 3.5% on Friday after news of the coronavirus variant triggered a global sell-off, as countries introduced new travel curbs on fears the Omicron variant could resist vaccinations and upend a nascent economic reopening.

U.S. President Joe Biden is due to update the public on the variant and the country's response later in the day, the White House said.

Travel stocks, among the worst hit during Friday's sell-off, marked strong gains. Shares of major airline operators rose between 0.7% and 2.6% after plummeting 3% to 9% on Friday.

"If Omicron did become a major issue, it would have to be bigger than the Delta waves which we just went through. There's no question that the (Fed) taper would either be paused or delayed," said Thomas Hayes, managing member, Great Hill Capital LLC, New York.

"You may get a little whiplash back and forth with headlines in coming weeks, but on balance, people need to have exposure into year end."

At 9:46 a.m. ET, the Dow Jones Industrial Average was up 129.10 points, or 0.37%, at 35,028.44 and the S&P 500 was up 39.39 points, or 0.86%, at 4,634.01. The Nasdaq Composite was up 167.76 points, or 1.08%, at 15,659.41.

Gains in the Dow Jones were stifled by Merck & Co Inc , which dropped 4.7%, adding to a 3.8% fall on Friday after updated data from study of its experimental COVID-19 pill showed lower efficacy in reducing risk of hospitalization and deaths than previously reported.

Among other stocks, casino operators Wynn Resorts and MGM Resorts International slipped 1.9% and 0.4%, respectively, tracking losses in their Macau units, which were rattled by arrests over alleged links to cross-border gambling and money laundering.

Advanced Micro Devices rose 2% following a report electric-car maker Tesla Inc has started using a new AMD chip in Model Y vehicles in China.

Tesla's shares gained 3.5% after a report that chief Elon Musk urged employees to reduce cost of vehicle deliveries.

Apple Inc gained 1.7% after HSBC raised its price target on the iPhone maker's stock.

Advancing issues outnumbered decliners by a 2.46-to-1 ratio on the NYSE and by a 1.51-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and no new lows, while the Nasdaq recorded 20 new highs and 59 new lows.