Both the Dow and Nasdaq continued their rally today of more than 1.5% in the wake of Brexit, with many seeing the drop in stock prices as a buying opportunity according to the Wall Street Journal (ex. RedHat, which had dropped 11% but rebounded 4% due to its isolated nature from Europe, according to WSJ). Other factors contributing to this possibly short-lived rally include the covering of shorts by institutional investors, which increases demand for shares on the open market thereby increasing stock prices.
Government bonds, including the 10 Year T-Note, have seen a 96% increase in prices according to the WSJ, which of course corresponds to a decrease in yields which have been flat since the massive drop following Brexit. US 10 Year T-Note yields have been further pushed down (6%) by the fact that many other alternative sovereign bonds yield negative interest rates (Germany, as of today, with -0.12%).
U.S. manufacturing has stabilized, with the ISM increasing 7.5 points to 56.8, and U.S. Midwest factory activity rose for the first time in 10 months. Additionally, the Chicago Business Barometer is now at 49.4, almost breaking into expansion territory. This news was another contributing factor to the ongoing rally in stock prices this week.