By Geoffrey Smith
Investing.com -- U.S. stock markets opened sharply higher on Tuesday as traders rushed to buy the recent dip, in the hope that the new variant of Covid-19 that caused it will not, after all, be economically disruptive.
By 9:45 AM ET (1445 GMT), the Dow Jones Industrial Average was up 409 points, or 1.2%, while the S&P 500 was up 1.6% and the Nasdaq Composite was up a whopping 2.2%.
Data emerging so far from South Africa, where the Omicron variant was first identified, suggest that it causes a milder form illness than the Delta variant that has been responsible for most of the 5.3 million deaths attributed worldwide to Covid-19 in the last 21 months. A strain that becomes dominant by virtue of its higher infectiousness, but which causes less strain on public health systems around the world, has the potential to speed up the progress toward herd immunity and bring the pandemic to an earlier end.
Among early movers, Intel (NASDAQ:INTC) stock stood out with a gain of 5.0% after it confirmed it will spin off its Mobileye (F:0ME) venture, helping it to raise cash as it embarks on an expensive expansion of manufacturing capacity. A Reuters report said Mobileye could be valued at over $50 billion, more than triple what Intel paid for it only four years ago. That would also imply that Mobileye, whose specialty is in developing chips for the autonomous vehicle segment, now accounts for around a quarter of Intel's overall market value.
One of Intel's biggest rivals was also in the news earlier: Samsung Electronics (OTC:SSNLF) said it would revamp its structure and appoint a third co-CEO, in an effort to revive its flagging mobile business. Samsung (KS:005930) too is spending heavily on new chipmaking capacity, having committed last month to a new factory in Texas that will cost $17 billion. Samsung ADRs were yet to trade in over-the-counter markets but closed up 1.4% earlier in Seoul.
Action was dominated by tech megacaps, which have suffered a rare sell-off in recent days as first the Federal Reserve threatened to speed up the pace of monetary tightening and then the emergence of Omicron threatened a new economic slowdown. By 10 AM ET, Apple (NASDAQ:AAPL) stock was up 2.9%, Amazon (NASDAQ:AMZN) stock was up 2.3% and Microsoft (NASDAQ:MSFT) stock was up 1.9%, the last of the three also supported by reports that it's planning to raise prices for its flaghip Office suite of applications - at least for those who choose to pay bills by monthly subscription. Tesla (NASDAQ:TSLA) stock rose back above $1,000 with a 4.1% gain.
Elsewhere, American Airlines (NASDAQ:AAL) stock rose 3.4% to its highest level in two weeks after the company announced that long-standing CEO Doug Parker will step down in March, to be replaced by current president Robert Isom.