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Dow Ends 500 Points Higher as Stocks Rebound from Three-Day Slump

Stocks rebound from a three-day slump Tuesday amid optimism about the impact of the omicron variant.
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Stocks bounced back on Tuesday after concerns about the omicron variant sparked the worst three-day performance since September.

The Dow Jones Industrial Average finished up 560 points, or 1.60%, to 35,492, while the S&P 500 climbed 1.78% and the tech-heavy Nasdaq gained 2.40%.

President Joe Biden outlined his administration's expanded effort to slow the acceleration of omicron infections on Tuesday.

He directed his defense secretary to get 1,000 military medical professionals ready to help where needed; he announced new vaccination and testing sites; and he said his administration was buying 500 million rapid Covid-19 tests to distribute free to the public, according to the New York Times.

“This is not March of 2020,” Biden said. “Two hundred million people are vaccinated. We’re prepared; we know more.”

The omicron variant is now the dominant strain in the United States, but initial reports indicate relatively mild symptoms and hospitalization rates, suggesting a potentially limited impact on the global economy.

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The 10-year Treasury yields advanced to 1.47% and oil prices climbed 4.2% to $71.47.

Reopening stocks, such as airlines, casinos, and cruise lines advanced, with Royal Caribbean Cruises  (RCL) - Get Royal Caribbean Group Report, United Airlines  (UAL) - Get United Airlines Holdings, Inc. Report and Las Vegas Sands  (LVS) - Get Las Vegas Sands Corp. Report all climbing.

Craig Erlam, senior market analyst, UK & EMEA, with Oanda called for caution, saying "stock markets are bouncing back on Tuesday despite there being little of note to trigger the sentiment U-turn as whipsaw price action continues ahead of the holiday season."

"In the same way that we shouldn't get too carried away with yesterday's sell-off which was likely caused by low liquidity and some pre-holiday season risk reduction," he said, "we shouldn't read too much into today's rebound."

These are illiquid markets, Erlam added, "and omicron continues to be a huge cloud of uncertainty over them."

In company news, Micron Technology  (MU) - Get Micron Technology, Inc. Report shares surged 10.5% after the chipmaker posted stronger-than-expected first quarter earnings and a solid near-term outlook.

Nike  (NKE) - Get NIKE, Inc. Class B Report shares powered 6.1% higher after the world's biggest sports apparel company topped Wall Street forecasts for its second quarter earnings, thanks in part to soaring sales in its home north American market.