Stocks mostly lower, dragged down by airlines shares

NEW YORK (AP) — Stocks were mostly lower on Tuesday after the long holiday weekend, dragged lower by airline stocks which were battered by the bad weather. Investors had earlier in the day been positive on the market after China lifted some of its COVID-19 restrictions.

The S&P 500 index was down 0.2% as of 12:40 p.m. ET, the Dow Jones Industrial Average was up 0.3% and the technology-heavy Nasdaq composite was down 0.9%. The Russell 2000 index of small companies was down 0.2% as well.

Airline stocks were broadly lower, with shares of Southwest Airlines falling nearly 5% in midday trading. The carrier had to cancel roughly two-thirds of its flights over the last couple of days, which it blamed on problems related to staffing and weather. It is a rare stumble for Southwest, an airline typically known as one of the more reliable carriers in good times and bad.

Delta Air Lines and American Airlines were both down roughly 0.5% as well.

Elsewhere around the 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.

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.

In other trading Tuesday, U.S. benchmark crude oil picked up $1.50 to $80.75 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.