S&P 500 ekes out a new record high as traders weigh omicron threat

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U.S. stocks rose Tuesday as the major stock indexes looked to build on record highs in the final week of the year.

The S&P 500 gained 0.3% and reached a new intraday high. The benchmark index traded above the 4,800 level. The Dow Jones Industrial Average added about 170 points, or 0.5%. The Nasdaq Composite traded near the flatline.

The move comes after stocks rallied in Monday’s regular session, with the S&P 500 closing at its 69th record high of the year.

Markets continued to look to pandemic news for direction with the threat of the omicron variant looming large.

“If the market isn’t beaten down by this new Covid variant, I think it tells you there’s nothing stopping the market from keeping on advancing the rest of the year,” Margaret Patel, Allspring Global Investments senior portfolio manager, told CNBC’s “Squawk on the Street.”

The Centers for Disease Control and Prevention announced on Monday that it was shortening its isolation recommendation for people who test positive to five days from 10, if those people do not have symptoms.

Research out of South Africa also indicated that omicron infections can help boost immunity to the earlier delta strain of Covid.

Travel-related stocks hit hard in Monday’s session rebounded Tuesday. Aircraft maker Boeing led the Dow with a 2.2% gain and cruise line Carnival was the S&P 500’s top performer rising 3.2%. Airline stocks got a lift with American Airlines, Delta and United all higher.

Stocks historically rise in light trading during the final days of the year, often called the “Santa Claus rally.”

However, many Wall Street pros predict relatively small gains for stocks in 2022 after two strong years.

“If you look around Wall Street, you see very tame expectations, and it’s probably a reflection that we’re probably pretty late in the cycle,” Jim Lacamp, senior vice president at Morgan Stanley Wealth Management, said on “Closing Bell.”

Stocks dipped in late November, in part because of the rise of the omicron variant of Covid-19, but have since rebounded as governments have largely shied away from reinstating lockdowns and strict social distancing measures.

For the year, the S&P 500 is up more than 27% and the Nasdaq is up about 23%. The Dow is the relative laggard, up more than 19%.