FX.co ★ US stock market gets over Omicron fears

On Wednesday, US equities went up after a day of muted trading. Tech stocks slowed down their decline amid speculation that the increase in COVID-19 cases would not halt the economic recovery. US treasury yields also inched higher.

The S&P 500 and the Dow Jones Industrial Average approached a record high close, while the NASDAQ 100 changed negligibly. The US Treasury 10-year bond yield rose by 7.4 basis points to 1.55% and approached the November high. The US dollar went down against other currencies.

New reports that the Omicron strain is less severe eased investor concerns, despite the total amount of new infections worldwide surpassing 1,000,000 for the second straight day. COVID-19 remains one of the key risks for the global economy in 2022, alongside the Fed interest rate hike and China's outlook.

"We just might get a relatively calm last week of the year after all. That said, thin markets can change on a dime, so investors will want to stay nimble over the next three days," Matt Maley, chief market strategist for Miller Tabak + Co wrote.

"We're sober about potential headwinds that still could be coming, even the rest of this year, but early in 2022 — the Fed is going to be raising rates, that will change things for the markets," Ann Miletti, head of active equity at Allspring Global Investments, said. "We are also hopeful because as you look at a lot of the economic data, it remains strong."

Here are this week's key economic events:

Thursday: EU consumer price index data

Thursday: US initial and continuing unemployment claims report

Friday: China's PMI data