US stocks rebounded for the second straight trading day, as bond yields stabilised after a broad surge on Tuesday. Nike and FedEx’s shares both jumped amid stronger-than-expected earnings, which added to the optimism.
On the economic front, the US consumer confidence index for December improved to 108. 3 from 101.4 the prior month, well above an estimated 101.0, which is the highest in eight months. The data suggests that inflation expectations sharply declined amid a drop in both oil and gas prices. The US PCE data that is due for release later today will be on the watch to provide more clues about consumer affordability, considering high inflation.
It seems Wall Street is trying to make a Santa Claus rally, which is defined as a broad stock market rally during the last five trading days in December and the first two trading days in January. In history, US stocks have risen 1% on average in this period, and 76% of the time.
- All 11 sectors in the S&P 500 rose, with energy and tech shares leading gains. Energy stocks were up 1.8% as major oil producers rose amid a third-day rise in oil prices. The three typical growth sectors, including consumer discretionary, technology, and communication services, were all up more than 1%. Both Apple and Meta Platforms' shares rose more than 2%. Tesla is the only tech stock that finished lower.
- Nike shares jumped 12% amid stronger-than-expected earnings. In the quarter that ended in November, the company reported earnings per share at 85 cents, higher than an estimated 64 cents; And its revenue was at $13.32 billion, also better than the consensus of $12.57 billion, growing by 17% year on year. Nike has also provided a positive outlook for the fiscal year 2023.
- The Japanese yen fell slightly against the US dollar after a one-day surge, after the BoJ announced an unscheduled bond-buying operation. The bank offered to buy JPY100 billion 3-5 year and JPY100 billion 5-10 year JGBs.
- Crude oil rose for the third straight day as the US inventory data shows a larger draw of 5.9 million barrels than the estimated decrease of 1.65 million barrels. The US SPR fell to 378.6 million barrels, the lowest since 1983. Undersupply outweighs recession fears and pushed up crude prices.
- Asian equity markets are set to open higher. ASX futures were up 0.65%, Nikkei 225 futures rose 0.38%, and Hang Seng Index futures advanced 1.27%.