U.S equities notched new record highs, boosted by a Senate vote to reopen the government after a three-day shutdown, as well as a slew of M&A announcements. Treasury yields retreated slightly from a recent rally to multi-year highs and the U.S. dollar added to its drop as of late to multi-year lows. Meanwhile, crude oil and gold prices saw modest gains.

The Dow Jones Industrial Average (DJIA) rose 143 points (0.6%) to 26,215, the S&P 500 Index gained 23 points (0.8%) to 2,833, and the NASDAQ Composite jumped 72 points (1.0%) to 7,408. In moderate volume, 855 million shares were traded on the NYSE and 2.1 billion shares changed hands on the NASDAQ. WTI crude oil advanced $0.26 to $63.57 per barrel and wholesale gasoline added $0.02 to $1.88 per gallon. Elsewhere, the Bloomberg gold spot price gained $2.99 to $1,334.83 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—lost 0.2% to 90.40.

Treasuries finished slightly higher, with the economic calendar void of any major releases today. The yield on the 2-year note was flat at 2.07%, while the yields on the 10-year note and the 30-year bond dipped 1 basis point to 2.65% and 2.92%, respectively.

Treasury yields remain at multi-year highs and the U.S. Dollar Index at multi-year lows, with the markets grappling with synchronized global economic growth, flared-up political uncertainty as the U.S. government remains shut down for a third day, and world monetary policy appearing to be heading toward the path to normalization.

The Senate secured enough votes to pass a three-week funding bill and allow the government to reopen, with a House vote expected to follow with the same result. The stock markets are back at all-time highs despite the flared-up political uncertainty.

This sets the stage for a robust economic calendar this week, courtesy of December existing and new home sales reports, as well as preliminary durable goods orders and the Leading Index for last month, and the preliminary Market business activity reports for January. The week will culminate with Friday’s first look (of three) at Q4 GDP, which is expected to decelerate to a 3.0% annualized pace of growth. However, with only a small fraction of S&P 500 companies having reported thus far, earnings season is poised to kick into a higher gear this week and likely dominate the attention. However, the docket will start slowly, with only the Richmond Fed Manufacturing Activity Index slated for release tomorrow, with economists anticipating a slight downtick in the reading to 19 for January from the 20 posted the month prior, but well above the level of zero that separates expansion from contraction in activity.

Schwab Center for Financial Research – Market Analysis Group

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