Stocks go for omicron-induced ride

Early market rally loses steam as investors struggle with variant.

NEW YORK — Wall Street had investors on another roller-coaster ride Wednesday, as an early stock market rally lost steam in afternoon trading.

The S&P 500 was up 0.6% late in the afternoon. It had been 1.9% higher in the early going following some better-than-expected readings on the U.S. economy. The afternoon pullback is the latest dizzying move for Wall

Street’s benchmark, which sank 2.3% on Friday for its worst loss since February, only to then rise 1.3% on Monday and then fall 1.9% on Tuesday.

The wild movements are partly the result of investors struggling to handicap how much damage the newest coronavirus variant will do to the economy. Markets were already headed lower Wednesday afternoon when the White House announced that the first case of the omicron variant had been found in the

U.S., in a person who recently had returned from South Africa.

“Investors are going to have to get used to the idea that this is not going to be the last variant,” said Liz Young, chief investment strategist at Sofi. “This is likely something that is with us for a while and we have to learn to live with it and manage growth from an investment standpoint.”

Another weight dropped Tuesday on Wall Street when the head of the Federal Reserve said it may halt its immense support for financial markets sooner than expected given the persistently high inflation sweeping the world.

But since climbing out of its early 2020 collapse caused by the first wave of COVID-19, one hallmark of the stock market’s powerful run has been the continued willingness by bargain-hunting investors to buy following any dip in prices. That lasting habit has helped the S&P 500 set 66 all-time highs so far in 2021, the second-most on record for a year.

It also helped the Dow Jones Industrial Average to rise 358 points, or 1%, to 34,841, as of 10 a.m. The Nasdaq composite was 1.5% higher.

Longer-term Treasury yields also recovered some of their sharp drops from the day before triggered by worries about slowing economic growth.

The yield on the 10-year Treasury rose to 1.49% from 1.44% late Tuesday, when it fell from 1.52%.

Some better-than-expected data on the economy helped. A report from the Institute for Supply Management showed that growth in the U.S. manufacturing sector accelerated faster last month than economists expected.