U.S. stocks were set to rise on Monday, led by gains in Apple which neared $3 trillion in market capitalization, while investors braced for a Federal Reserve meeting later this week where it will likely signal faster tapering of monetary stimulus.
Apple Inc shares rose 1.4% in premarket trading after J.P. Morgan raised its price target on the iPhone maker’s shares to the highest on Wall Street. It was poised to become the first company in the world to hit $3 trillion in market value.
“When you see big companies like (Apple) do well, it basically means that people are gravitating towards quality. Big companies that are very profitable, that have very strong cash flows are really considered a safe haven in many cases,” said Randy Frederick, managing director.
Other technology and communications stocks including Meta Platforms Inc, Microsoft Corp, Netflix Inc and Alphabet Inc also gained between 0.2% and 0.7%.
Wall Street’s main indexes have recouped most of their declines from late November after the new Omicron variant of the coronavirus was detected, with the S&P 500 index hitting an all-time closing high on Friday.
Market participants have been buying up shares of mega-cap growth companies, along with many industrial bellwethers and value-oriented stocks, with many analysts pointing to investors buying the dip after the steep selloff caused by Omicron worries.
The Fed’s policy decision still remains a top event for markets, with bets running high that the U.S. central bank will hint at a faster tapering of asset buying and an earlier start to raising interest rates.
A Reuters poll of economists sees the central bank hiking key interest rates from near zero to 0.25-0.50% in the third quarter of next year, followed by another in the fourth quarter.
Positive updates about vaccines and antibody cocktails to combat the new variant, along with a recent reading on inflation that was in line with consensus, have also kept sentiment afloat.
However, travel-related stocks fell on Monday after at least one patient died in the United Kingdom after contracting the Omicron variant of the coronavirus.
Shares of Carnival Corp and American Airlines fell more than 1% each to lead declines among cruise operators and air carriers.
“The big unknown is still the Omicron variant and we don’t know just yet how that may affect markets and the economy but as long as that uncertainty exists the volatility is probably going to remain higher,” Frederick said.
At 8:14 a.m. ET, Dow e-minis were up 21 points, or 0.06%, S&P 500 e-minis were up 10 points, or 0.21%, and Nasdaq 100 e-minis were up 63.5 points, or 0.39%.
Pfizer Inc rose 1.3% as it agreed to acquire Arena Pharmaceuticals in a $6.7 billion all-cash deal. Shares of Arena surged 90.4%.