Wall Street Whips into Rally Mode as Brexit Fears Wane

Traders on Wall Street followed global markets higher as they ditched last week’s cautious sentiment, diving back into traditionally riskier assets. The major averages capped the day well off session highs, but still solidly in positive territory.

At the closing bell, the Dow Jones Industrial Average closed up 130 points, or 0.74%, to 17805. The S&P 500 gained 12 points, or 0.58% to 2083, while the Nasdaq Composite gained 36 points, or 0.77%, to 4837.

Bob Doll, chief equity strategist at Nuveen Asset Management, said the move higher was due largely to traders reversing last week’s positions.

“We’re back to where we started [at the beginning of last week],” he said. “Nothing particularly new is overtaking market sentiment, we overdid it on the downside last week.”

The rush out of safe havens was apparent as gold shed 0.19% on the session, though it had been down more than 0.5% in midday trading. The precious metal settled at $1,290 a troy ounce. Meanwhile, alongside a move higher in British and German government bond yields, the 10-year U.S. Treasury bond yield, which moves inversely to its price, rose to 1.67%, while the VIX volatility index, was down more than 9% as it saw its biggest drop since March.

Elsewhere, oil prices rallied as U.S. crude jumped 2.90% to settle at $49.37 a barrel, while Brent crude spiked 3.01% to $50.63 a barrel.

“That such shifts in global markets can be occasioned by shifts in polling of a few thousand people in just one nation seems odd, but such is the importance of the Brexit referendum to global markets that all other concerns have been cast aside, at least for now,” Chris Beauchamp, senior market analyst at IG said.

Nine of 10 S&P 500 sectors posted gains on the session as energy, industrials and consumer discretionary led the way higher, while utilities lagged. Doll said while it may be tempting for investors to get caught up in the “silly season” of Brexit, those looking for long-term gains should resist the temptation to move assets around based on daily market gyrations.

“Figure out what your long-term objective is. If it’s to add to equities, don’t chase them, but take advantage of the downside. If you have money to take off, take it in the top,” he advised. “Trying to trade this for anybody is difficult”

An absence of economic or fundamental factors helped drive market sentiment on Monday. Beauchamp warned that euphoria could fade on Tuesday as the Federal Reserve comes back into focus. Fed Chief Janet Yellen is set to appear in front of the Senate Banking Committee to testify on monetary policy. After a June Federal Open Market Committee that yielding no chance in interest-rate policy, market watchers will keep a keen focus on any change in sentiment from Yellen both during her remarks and the question-answer period that follows.

“As with chances of a rate hike this year having crashed, she may take the opportunity to turn a little hawkish, just to prevent markets from becoming too complacent. There is still a long week ahead of us,” Beauchamp cautioned.

Also on the docket for the remainder of the week are key economic data releases including existing and new home sales figures, as well as updates to durable goods orders and consumer sentiment.