U.S. Equity Markets Post Best Day in Nearly 10 Years

The major U.S. equity indexes posted their best session in nearly 10 years on Wednesday as Wall Street seemingly attempted to recover a major portion of its December losses in just one day. The Dow Jones Industrial Average was the star of the session, putting in its best one-day performance in history.

Some of the major issues dogging the markets lately, including uncertainty over the direction of interest rates, the clash between President Trump and the Fed and the partial government shutdown, seemed to take a backseat to value-seeking investors.

In the cash market, the benchmark S&P 500 Index settled at 2467.70, up 116.60 or +4.40%. The blue chip Dow Jones Industrial Average finished at 22878.45, up 1086.25 or +4.43% and the technology-based NASDAQ Composite ended the session at 6554.36, up 361.44 or +4.97%.

The major markets were helped by strong performances in the consumer discretionary, energy and technology sectors. All posted better than 6 percent gains.

Additionally, just to highlight the current volatility in the markets, stocks went from posting their worst Christmas Eve in history to displaying their biggest post-Christmas rally for U.S. stocks ever.

Retailers in the Spotlight

Data released by Mastercard SpendingPulse showed retailers were having their best holiday season in six years. Investors responded to this news by driving the SPDR S&P Retail ETF (XRT) higher by 4.7 percent. Components of this ETF – Wayfair, Kohl’s and Dollar General – all jumped by more than 7 percent. Retail giant Amazon rose a whopping 9.45 percent after the company said it sold a record number of items this holiday season.

Energy Shares Boosted by Jump in Crude Oil Prices

A more than 8 percent leap in U.S. crude oil futures triggered a buying spree in energy stocks, led by an 11.9 percent gain in shares of Marathon Oil and an 11 percent jump in Hess.

Only Temporary Relief

Although the rally was welcomed by investors, the markets are not out of the woods yet. Some question its validity due to low holiday volume. Others are saying the strong rally merely offers short-term relief from increasing concerns over political issues in Washington including the rift between President Trump and the Federal Reserve as well as the partial government shutdown which is expected to extend into at least January 4.

We could see a technical bounce into the end of the year due to profit-taking and position-squaring, however, we’re not likely to see a sustained rally until investors regain their confidence in the Trump administration, Congress and the Federal Reserve.