The U.S. stock market surged on Wednesday as lawmakers reached a
last minute agreement to avert the fiscal cliff.
Investors who had been concerned about the immediate effects to
the economy if a deal had not been reached poured money into stocks
and other risky assets. In a memorable first trading day of the
year, the Dow and S&P climbed well over two percent while the
Nasdaq notched a gain of more than three percent.
The Dow Jones Industrial Average soared over 300 points to close
just below 13,413. On a percentage basis, the Dow jumped 2.35
percent on the first trading day of the year.
The S&P 500 climbed more than 36 handles, or 2.54 percent,
to 1,462. The biggest winner on the session was the Nasdaq which
surged just over three percent or almost 93 points on the
All of the major averages gapped higher at the open of trade
after the debt deal was announced late on Tuesday evening. Stocks
were trending lower on an intra-day basis around mid-day, but heavy
buying pushed the major averages out near session highs.
The U.S. dollar was essentially flat against a basket of foreign
currencies on Wednesday, and dollar index futures notched a gain of
only 0.06 percent. The euro was weaker against the greenback with
the EUR/USD pair falling 0.32 percent to $1.3175.
The dollar also gained against the yen as the USD/JPY added 0.38
percent. Losses came against the Canadian dollar, however, with the
USD/CAD falling 0.66 percent. Risk appetite also drove the
Australian dollar higher versus the greenback with the AUD/USD
surging 0.91 percent.
Crude oil managed gains in the wake of the jubilant market
atmosphere. At last check, NYMEX crude futures, the U.S. benchmark,
were up a little over one percent to just under $93.00. Brent crude
contracts were also trading up more than one percent to $112.33.
Natural gas continued its sell-off, however, and notched a loss of
around 3.50 percent on the session.
Precious metals fared well to start the year. COMEX gold futures
had added around 0.59 percent to $1,685.60 at last check while
silver futures were up well over two percent to just under
In the agricultural complex, almost all of the grains sustained
losses on the session. Corn and soybean prices were down around one
percent and wheat fell almost three percent.
Treasuries plummeted on the day as money flowed out of bonds and
into riskier assets. The iShares Barclays 20+ Year Treasury Bond
) lost 1.34 percent to close at $119.56.
Yields surged across the curve as investors dumped government
bonds. The yield on the 30-Year Bond jumped 10 basis points to 3.04
percent and the 10-Year Note saw its yield climb 8 basis points to
1.83 percent. Yields also moved higher on shorter-term
Volatility and Volume
The VIX has been absolutely crushed in recent days as volatility
expectations due to the fiscal cliff have come out of the market.
The VIX plunged another roughly 19 percent on Wednesday to 14.65
after falling more than 22 percent on Monday ahead of the fiscal
cliff deal. The sell-off in the VIX has been staggering as the fear
barometer has fallen from above 22 to below 15 in the course of two
Volume was heavier than normal on the session. Around 177
million shares of the SPDR S&P 500 ETF (NYSE:
) traded hands compared to a 3-month daily average of roughly 139
million. It was somewhat surprising, however, that volume was not
heavier given the fiscal cliff agreement and it being the first
trading day of the year. This could indicate that the market is
skeptical of the huge rally that has taken place over the last two
Shares of Zipcar (NASDAQ:
), which only went public in April 2011, surged almost 48 percent
after Avis Budge Group (NYSE:
) agreed to acquire the company for around $500 million in
Weak 2013 earnings guidance triggered a steep sell-off in shares
of Dole Food Company (NYSE:
), which fell more than 13 percent on the session.
Insurance stocks were strong on the day. Metlife (NYSE:
) climbed almost seven percent while Lincoln National (NYSE:
) and Hartford (NYSE:
) both added almost six percent.
Other movers included Skullcandy (NASDAQ:
) and Synergy Pharmaceuticals (NASDAQ:
). Skullcandy shares fell almost 13 percent while Synergy soared
better than 18 percent.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.
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