Wal Street opening lower; S&P off 0.2% after holiday break

By ELAINE KURTENBACH
AP Business Writer

BANGKOK (AP) — Wall Street is reopening Tuesday with stocks slightly lower following a holiday break. The S&P 500 slipped 0.2% and the Dow Jones Industrial Average is flat just after the open, while the technology-heavy Nasdaq composite fell 0.6%. Investors in Europe and Asia bid up stocks following news air passengers arriving in China from abroad will no longer have to observe a quarantine, the latest step toward dropping once-strict virus-control measures in the world’s No. 2 economy. Oil prices are rising. Southwest Airlines is down the most in almost three months after a wave of flight cancellations attracted scrutiny by regulators.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.

World shares advanced Tuesday after China announced it would relax more of its pandemic restrictions despite widespread outbreaks of COVID-19 that are straining its medical systems and disrupting business.

China’s National Health Commission said Monday that passengers arriving from abroad will no longer have to observe a quarantine, starting Jan. 8. They will still need a negative virus test within 48 hours of their departure and to wear masks on their flights.

But it was the latest step toward dropping once-strict virus-control measures that have severely limited travel to and from the world’s No. 2 economy.

“With economic activity floundering, and multinationals questioning the viability of China as a sourcing location, policymakers have — as so many times in the past — adopted a very business-like approach,” Stephen Innes of SPI Asset Management said in a commentary.

Companies welcomed the move as an important step toward reviving slumping business activity.

Germany’s DAX gained 0.7% to 14,032.67 and the CAC 40 in Paris was up 0.9% at 6,564.29. Markets in London were closed for a holiday.

Oil prices also advanced.

The futures for the Dow Jones Industrial Average and the S&P 500 were 0.6% higher. On Friday, the S&P 500 closed 0.6% higher. It is down 19.3% for the year, just on the cusp of a bear market. The Dow Jones Industrial Average rose 0.5%, while the tech-heavy Nasdaq edged 0.2% higher. The Russell 2000 index picked up 0.4%.

China has joined other countries in treating cases instead of trying to stamp out infections. It has dropped or eased rules on testing, quarantines and movement, trying to reverse an economic slump. But the shift has flooded hospitals with feverish, wheezing patients, and authorities are going door to door and paying people older than 60 to get vaccinated against COVID-19.

The Shanghai Composite index jumped 1% to 3,096.57. Hong Kong’s markets were closed for a holiday, as were those in Australia.

Tokyo’s Nikkei 225 added 0.2% to 26,447.87 and the Kospi in Seoul gained 0.7%, to 2,332.79.

In Bangkok, the SET index rose 1% in anticipation that an easing of controls on overseas travel for Chinese would boost the all-important tourism industry.

Markets in the U.S. and Europe were closed Monday for holidays.

Solid U.S. consumer spending and a strong jobs market have kept the economy growing, but they also raise the risk that the Federal Reserve will need to persist in raising interest rates and keeping them high to crush inflation.

After last week’s updates, the last big reports of the year, investors will be watching for corporate earnings that may provide insights into how the economy is faring.

The pace of price increases has eased, but the Fed has said it will keep raising interest rates to tame inflation. Its key overnight rate is at its highest level in 15 years, after beginning the year at a record low of near zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast it will reach a range of 5% to 5.25% by the end of 2023 and not be cut before 2024.

The higher rates bring the risk the economy could stall and slip into a recession in 2023. They also have been weighing heavily on prices for stocks and other investments.

In other trading Tuesday, U.S. benchmark crude oil picked up 50 cents to $80.06 per barrel in electronic trading on the New York Mercantile Exchange. It gained $2.07 to $79.56 before markets closed for the long Christmas weekend holiday.

Brent crude oil, the pricing basis for international trading, also added 53 cents to $85.03 per barrel.

In currency dealings, the U.S. dollar fell to 133.24 Japanese yen from 132.89 yen late Monday. The euro rose to $1.0659 from $1.0638.