4:10pm: Strong consumer confience helps propel markets higher
Positive earnings from Nike and FedEx, coupled with strong US consumer confidence number for December, helped push yields slightly lower as the major indices all closed well in the green
At 4pm, the Dow was 1.6% higher at 33,376, while the Nasdaq and the S&P 500 both posted gains of 1.5% to close att 10,709 and 3,878 points respectively.
Analyst Fawad Razaqzada at City Index and FOREX.com noted that the Dow was testing key resistance around 33,400 area, its last major support before it broke down last week.
"Once support, could it now turn into strong resistance leading to a big sell-off?" Razaqzada wrote.
"If resistance holds here, I would expect to see a drop back to the high of Tuesday’s range at 33,000. And if that level fails to offer support, then there is a possibility we will see a revisit of the week’s low, which at 32,500 happens to be where the 200-day average comes into play. However, if resistance at 33,400 breaks convincingly, then that would end the renewed bearish bias."
12:07pm: "Santa rally" arrives in the nick of time
At midday, the Dow was up 485 points, 1.5%, to 33,335, the Nasdaq Composite added 151 points, 1.4%, to 10,698 and the S&P 500 improved 52 points, 1.4%, to 3,874.
The positive earnings reports from Nike and FedEx have carried over into a broader market rally in the days before Christmas. Shares of the companies were up more than 14% and 4%, respectively.
"This Santa rally has been long-expected, and eagerly-awaited, but kept being delayed by central banks, inflation data and other road bumps that have prevented any meaningful bounce developing for most of the month so far," said Chris Beauchamp, chief market analyst at online trading platform IG. "Perhaps, with so little on the agenda before Christmas Day, markets finally have scope for a decent rally to round off such a difficult year.”
For the year, though, the benchmarks are on pace to end a three-year winning streak and finish lower.
9.35am: Stocks buoyed by Nike, FedEx earnings
US stocks started Wednesday in the green as earnings from Nike and FedEx were well-received by investors.
Just after the market opened, the Dow Jones Industrial Average had added 310 points or 0.9% at 33,159 points, the S&P 500 was up 25 points or 0.7% at 3,846 points, and the Nasdaq Composite was up 34 points or 0.3% at 10,581 points.
ING FX strategist Francesco Pesole said markets are unlikely to be moved by any data release over the Christmas period, but a bumpy exit from the zero-Covid policy in China and developments in the energy market might cause a deterioration in global risk sentiment.
“We doubt data will be able to shake markets in the low-volatility environment of the festive period,” Pesole said.
He said news from China and the energy crisis were more likely to drive any significant move if anything.
“In China, an increasing number of unofficial reports suggest that the actual death toll may be considerably larger than the reported one: should this be backed by more evidence, markets may increasingly doubt the sustainability of China’s zero-Covid exit path, with negative implications for the yuan, Asian EMFX, and high-beta currencies,” Pesole said.
6.30am: A little bit of Santa?
US stocks are expected to open higher on Wednesday, building on gains from yesterday, with after-hours results from FedEx Corp and Nike Inc providing a lift for weary investors still holding out for a pre-Christmas rally.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.7% in pre-market trading, while those for the broader S&P 500 index were 0.5% higher and contracts for the Nasdaq-100 added 0.4%.
“Wall Street advanced yesterday and futures markets suggest Wednesday will see further gains in early trade,” said James Hughes, chief market analyst at scopemarkets.com
Shares in FedEx and Nike were in focus as investors weighed the impact of the latest results from both firms which contained bright spots. Nike shares were up over 12% in pre-market deals, while FedEx shares were up over 4%.
“Economic news remains thin on the ground and there was also that canary-in-the-coalmine warning from FedEx last night after its revenues missed expectations in what many see as an alternative indicator over the pace of economic growth.
"However, it was far from a universally gloomy picture amongst corporates, with FedEx’s EPS (earnings per share) beating forecasts, whilst Nike which also reported last night saw shares add as much as 12% in the wake of well-received earnings news," noted Hughes.
Wall Street’s gains during Tuesday’s regular trading session snapped four straight days of losses and brought some much-needed Christmas cheer. That said, worries about the path for interest rates in the world’s biggest economy continue to keep many investors on the sidelines.
Last week, the Federal Reserve lifted interest rates by 50 basis points and signaled that its fight to dampen inflation is not over despite its year-long spate of rate increases. Investors worry that the aggressive tightening of monetary policy will push the US economy into a prolonged recession.
On the economic data front on Wednesday, US home sales data for November, due out at 10.00am ET, will likely get some attention as they will show whether buyer confidence has been dented by the Fed rate hikes.
Contact the author at jon.hopkins@proactiveinvestors.com