NEW YORK CITY, RAW – The S&P 500 and the Nasdaq have jumped more than 1.0 per cent following a sharp sell-off triggered by concerns over rising inflation and the new Omicron coronavirus variant while shares of Merck rose on progress in approval of its COVID-19 pill.

Merck & Co Inc gained 1.8 per cent after a panel of advisers to the US Food and Drug Administration narrowly voted to recommend the agency authorise the drug maker’s antiviral pill to treat COVID-19.

All of the 11 major S&P sectors advanced in early trading, with energy, materials and financials leading the gains.

Banks added 2.3 per cent, recouping losses suffered in the previous session.

US stocks slumped on Tuesday after Federal Reserve Chair Jerome Powell in his testimony before the Senate Banking Committee indicated that he no longer considers inflation as “transitory”.

Powell also said the US central bank would consider bringing forward plans for tapering its bond buying program at its next meeting in two weeks.

“Most investors realised that the Fed was going to have to shift course somewhat… there’s plenty of people that feel inflation is a bigger problem, and maybe a bigger risk to the market would be the Fed failing to take any action that recognises that,” said Rick Meckler, partner, Cherry Lane Investments in New Vernon, New Jersey.

“Coming to the year-end, where markets can be a little less liquid, we are likely to see some back and forth until we get more information (on Omicron).”

Investors were also awaiting a Fed report, known as the “Beige Book”, later in the day on current economic conditions to provide further insight into the central bank’s stance on inflation.

Powell’s seemingly hawkish comments on Tuesday served as a double whammy for markets, which were already nervous about the spread of the Omicron variant and its potential to hinder a global economic recovery.

A World Health Organisation official said some of the early indications were that most Omicron cases were mild, with none severe.

In early trading, the Dow Jones Industrial Average was up 327.06 points, or 0.95 per cent, at 34,810.78.

The S&P 500 was up 63.49 points, or 1.39 per cent, at 4,630.49, and the Nasdaq Composite was up 220.85 points, or 1.42 per cent, at 15,758.54, supported by shares of, Apple Inc, Tesla Inc, Google owner Alphabet Inc, Meta Platforms and Microsoft Corp.

All these tech companies added between 0.6 per cent and 2.0 per cent.

Meanwhile, separate data showed US private employers maintained a strong pace of hiring in November while manufacturing activity picked up amid strong demand for goods. Inc forecast current-quarter profit below estimates as it faces stiff competition from rivals including Microsoft, sending its shares down 6.7 per cent.

Advancing issues outnumbered decliners by a 5.99-to-1 ratio on the NYSE and by a 2.53-to-1 ratio on the Nasdaq.

The S&P index recorded six new 52-week highs and two new lows while the Nasdaq recorded 22 new highs and 41 new lows.