US stock index futures declined slightly from Thursday's close and are not showing much momentum because of the Christmas holiday, which is affecting traders and investors on Monday. However, the spread of the Omicron strain could have a negative effect by the end of the year. Dow Jones futures were down by 10 pips on Monday, while the S&P 500 and Nasdaq futures are also trading in the red zone, though markets are not under much pressure amid low volatility.
On Thursday, the Dow Jones Industrial Average gained 196.67 pips, or 0.55%, while the S&P 500 increased by 0.62% and closed at an all-time high. That left less than 0.4% to another all-time high. The Nasdaq Composite Index was up by 0.85%. Investors' sentiment was boosted by new research suggesting that the Omicron strain will have a less severe impact on the economy than other COVID-19 variants.
Robust statistics also allowed investors to go into the Christmas holiday in a positive sentiment. Many of Thursday's economic data pointed to a stable economy with good prospects for job growth and consumer spending. The Personal Consumption Expenditures Index, closely watched by the Fed, was up by 0.6% in November on a monthly basis. The Core PCE index rose by 4.7% year-over-year in November. Only the Dallas Fed's manufacturing index is expected to be released today.
On Sunday, US infectious disease specialist Dr. Anthony Fauci said that cases of COVID-19 are likely to continue to rise as the Omicron variant spreads rapidly around the world. The average was about 150,000 cases for the past week, and it is likely to be much higher after the Christmas and New Year's holidays. According to Johns Hopkins University, more than 52 million cases have been reported in the US. And now Omicron strain is the driving force behind the surge, which dominated earlier this month.
Against this backdrop, at the premarket, securities of travel and airline companies, led by United Airlines Holdings Inc. were sold-off after news that hundreds of flights were canceled over Christmas due to a COVID-19 spike. Notably, the outlook for monetary policy now depends directly on how comfortable companies and businesses will feel in the future during the next wave of the pandemics. United Airlines Holdings Inc. stock has already lost more than 2.85% before the market opened and the pressure is likely to increase.
Dr. Anthony Fauci also said that Americans should remain alert because reported cases of Omicron lead to more hospitalizations for patients, even though the data suggest that symptoms of the strain may have less serious effects.
As for the technical analysis of the S&P500 index
On Thursday, the price broke through support at $4,718. In case of a return of pressure on the index, this level may provide support. Its breakthrough is likely to drag the index down to $4,665 and $4,611, below which the buyers may have real problems. Below that level there are $4,551 and $4,512, which we might return to very quickly if the situation with the pandemics worsens. Now the important target for the buyers is to go beyond the all-time high around $4,751. Following such a scenario, the price is likely to retest $4,766 and $4,779.