Wall Street Rebounds As Risk Appetite Surges

Wall Street’s equity markets rebounded from Monday’s retreat as risk appetite surged and recovered from a three-day decline ahead of the Christmas holiday later this week.

The Dow Jones Industrial Average rose 1.5% to 35,441.21, the S&P 500 increased 1.6% to 4,639.79, and the Nasdaq Composite was up 2.2% to 15,304.73.

The North American government bond markets continued to selloff and the 10-year US yields climbed 4.6bps. The DXY (-0.1%) weakened marginally while most other major FX markets strengthened against the dollar.

The relatively light data schedule for Tuesday included the current account deficit for Q3, the Philadelphia Fed’s nonmanufacturing index for December and weekly Redbook retail sales.

A decline in the Philadelphia Fed’s Non-Manufacturing index to 28.3 in December from 46.1 in November highlighted the light data schedule.

The other services data already released for December have showed solid growth despite rising COVID-19 cases. The ISM’s national reading will be released on January 5.

The current account deficit widened to USD 214.77 billion in the third quarter from USD 198.32 billion in the previous quarter.

Redbook reported that US same-store Retail Sales were up 16.4% year-over-year in the week ended December 18, larger than a 16% gain in the prior week.

Late in the day, US President Joe Biden addressed the nation and detailed further efforts to combat the rise of COVID-19 cases.

There were no surprises in the speech as the White House had already suggested that lockdown measures are not being considered at this point. Biden confirmed this and encouraged everyone to get vaccinated as soon as possible.