More record highs for S&P 500, Dow on first day of 2022

Wall Street got 2022 off to a solid start Monday with more record highs for the S&P 500 and the Dow Jones Industrial Average.

The S&P 500 rose 0.6% and the Dow finished 0.7% higher. Both indexes eclipsed the record highs they set last Wednesday. The Nasdaq composite rose 1.2%.

Technology stocks and a mix of retailers and other companies that rely on consumer spending accounted for a big share of the gains. Apple rose 2.5%, closing just shy of becoming the first company to hit a market capitalization of $3 trillion. It briefly traded above that level during the day.

Tesla jumped 13.5% for the biggest gain in the S&P 500 after reporting strong delivery numbers for 2021.

Bond yields rose significantly. The yield on the 10-year Treasury rose to 1.64% from 1.51% Friday. That helped push up shares in banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America rose 3.8%.

The market’s solid start to 2022 follows another banner year for stocks on Wall Street. The S&P 500 closed out 2021 with a gain of 26.9%, or a total return of 28.7%, including dividends. That’s nearly as much as the benchmark index gained in 2019.

The S&P 500’s latest milestones, following up on the 70 record highs it posted last year, are a sign investors remain bullish about stocks, despite the recent spike in COVID-19 cases from virus’ fast-spreading omicron variant and expectations that the Federal Reserve will begin pushing up interest rates sometime this year to fight rising inflation.

“It’s been going on for months and months. We’ve had all-time highs and we keep hitting them,” said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “When you still have a low interest rate environment, which we do, at least for now, (stocks) are the place to be.”

The S&P 500 rose 30.38 points to 4,796.56. The Dow gained 246.76 points to 36,585.06. The Nasdaq rose 187.83 points to 15,832.80.

Smaller company stocks also rose. The Russell 2000 gained 27.24 points, or 1.2%, to 2,272.56.

The major challenges to the economy and corporate profits that investors navigated in 2021 remain potential headwinds in the new year, including the viral pandemic. Wall Street has been busy since December monitoring the latest wave of cases with the omicron variant.

Businesses and consumers are also still dealing with supply chain problems and persistently rising inflation that has made a wide range of goods more expensive. The rising costs could threaten to crimp consumer spending and weaken economic growth.

The long list of concerns made for a choppy end to 2021, but didn’t stop the broader market from delivering strong annual gains for stock investors.

“Despite all of this growth in omicron virus, the S&P hasn’t been derailed, with the exception of the day after Thanksgiving, when the news first broke,” Frederick said.

While the strength in technology companies drove the S&P 500 overall higher Monday, the number of stocks in the index that rose were just about even with decliners.

Health care companies fell broadly and kept gains elsewhere in the market in check. Pfizer shed 4.1% despite news that the U.S. expanded use its COVID-19 booster shots for children as young as 12.

Industrial stocks also fell. Union Pacific, a railroad operator, slid 1.7%.

Investors have several key pieces of economic data to look forward to during the first week of the new year. The Institute for Supply Management will give investors an update on the manufacturing sector on Tuesday and the services sector on Thursday.

The big event on the economic calendar this week is the Labor Department’s jobs report on Friday.