Dow climbs 560 points as optimism grows that Omicron risks are manageable

• US stocks finished higher Tuesday, putting an end to a three-session run of declines.
• President Joe Biden outlined further efforts to combat coronavirus, including sending free test kits to homes.
• A "Santa Claus rally" to close out 2021 is still likely, says CFRA's Sam Stovall.

US stocks finished higher Tuesday, rebounding from three straight days of losses, as it appeared the world's largest economy won't be headed toward renewed and widespread lockdowns to curb the spread of the Omicron coronavirus variant.

The Dow Jones Industrial Average soared 560 points with nearly all of its components gaining ground. The index was topped by Nike after the athletic shoe maker turned in fiscal second-quarter earnings that exceeded expectations. The energy sector paced the S&P 500's advance, in step with a surge in oil prices.

The Omicron variant has become the dominant strain in the US, but data suggest symptoms are milder than the Delta variant and the original COVID-19. While Omicron poses a mass health risk, President Joe Biden Tuesday afternoon said further efforts to reduce the spread should keep the US from having to impose a new round of restrictions on homes and businesses across the country.

Biden said the government will send 500 million free coronavirus test kits to homes as part of its response to the ongoing pandemic. Meanwhile, UK Prime Minister Boris Johnson said the country will not reinstate tougher lockdown measures as Christmas approaches.

Here's where US indexes stood at 4:00 p.m. on Tuesday:

• S&P 500: 4,649.24, up 1.78%
• Dow Jones Industrial Average: 35,492.70, up 1.60%
• Nasdaq Composite: 15,341.09, up 2.40%

"Stocks continue to recover from the recent Omicron-induced selloff. For the month, the S&P 500 is now flat, with the defensive sectors — consumer staples, health care, and utilities — still in front," Sam Stovall, chief investment strategist at CFRA Research, said in a note Tuesday. "We continue to expect a Santa Claus rally."

He added: "Since 1945, the S&P 500 has enjoyed a 'Santa Claus' rally, (consisting of the last 5 trading days of December and the first two of January) gaining an average 1.2% in price and rising in 58 of the last 76 years (76% frequency of advance)."

Around the markets, bitcoin prices began to stabilize but could see further declines if key support around $44,200 fails, according to Katie Stockton of Fairlead Strategies.

Twitter co-founder Jack Dorsey says VC involvement means crypto users don't own Web3, or the next iteration of the internet such as the metaverse.

Oil prices surged. West Texas Intermediate crude jumped 3.9% to $71.29 per barrel. Brent crude, the international benchmark, climbed 3.7% to $74.14.

Gold fell 0.4% to $1,788.40 per ounce. The 10-year yield rose 6 basis points to 1.468%.

Bitcoin leapt 3.6%, at $48,684.63.