The US stock market rallied on Monday while government bonds dropped in value as global markets calmed down and investors re-evaluated their worst-case scenarios for the Omicron coronavirus strain.

In the course of an extended rally, the S&P 500 Index posted large gains, offsetting some of its November losses, while the Nasdaq 100 surpassed major stock indices amid rising yields of Apple Inc. and Microsoft Corp. Yet, the US dollar rate remained almost unchanged.

US President Joe Biden urged Americans not to panic over the new virus strain, while Federal Reserve Chairman Jerome Powell said Omicron posed risks for the central bank to achieve stable prices and maximum employment. According to Pfizer officials, the effectiveness of their vaccine against the Omicron variant will be clear within two to three weeks.

ThinkMarkets analyst Fawad Razaqzada said, "Yesterday, investors assumed that Omicron may not be as bad as had been feared on Friday, and that vaccines may still prove effective. It will take some time to understand this variant better, given how little is known about it. So, get used to this sort of volatility as investors continually take profit and buy the dips here and there, until there's more clarity on the virus front."

The forecast for US home purchases in October rose to a 10-month high, indicating strong demand for housing. According to the National Association of Realtors, the Pending Home Sales Index rose by 7.5% from a month earlier.

Here are some highlights to watch this week:

- On Tuesday, Jerome Powell testifies before the Senate Banking Committee together with Treasury Secretary Janet Yellen;

- business activity index in China - Tuesday;

- Eurozone consumer price index - Tuesday;

- the Conference Board Consumer Confidence Index - Tuesday;

- Caixin Manufacturing PMI in China - Wednesday;

- Eurozone Manufacturing PMI - Wednesday;

- US Construction Spending, ISM Manufacturing, Beige Book - Wednesday;

- OPEC and allies may revise plans to resume oil supplies - Thursday;

- the number of initial jobless claims in the US - Thursday;

- US employment report, factory orders, and durable goods orders - Friday.