US Stocks Join Global Rally 04/24 13:43
U.S. stocks joined a worldwide rally Monday after results from the first
round of France's presidential election raised expectations that the European
Union will hold together. A candidate seen as pro-business won the most votes
Sunday, and many investors expect him to win a runoff against the remaining
anti-EU candidate, which is set for May 7.
NEW YORK (AP) -- U.S. stocks joined a worldwide rally Monday after results
from the first round of France's presidential election raised expectations that
the European Union will hold together. A candidate seen as pro-business won the
most votes Sunday, and many investors expect him to win a runoff against the
remaining anti-EU candidate, which is set for May 7.
Prices for gold, Treasurys and other investments that signal fear in the
market all sank, while the euro's value surged against the dollar.
KEEPING SCORE: The Standard & Poor's 500 index jumped 23 points, or 1
percent, to 2,372 as of 12:30 p.m. Eastern time. The Dow Jones industrial
average rose 209 points, or 1 percent, to 20,757, and the Nasdaq composite
surged 66 points, or 1.1 percent, to 5,977.
The gains were widespread. Five stocks rose for every two that fell on the
New York Stock Exchange.
TRIOMPHE: Coming into Sunday's presidential election in France, several
candidates railed against the European Union, one of the world's dominant
trading partners. A victory for one of those candidates would have followed the
path set by last year's vote in the United Kingdom to exit the European Union
and the U.S. election of President Donald Trump as a kick in the face to the
globalist, free-trade worldview.
Emmanuel Macron, a candidate investors see as pro-business, won the most
votes in Sunday's election. He will face Marine Le Pen in a runoff election in
two weeks. Le Pen is one of the candidates who is against the European Union,
but many investors expect Macron ultimately to be victorious.
"It's not only France" where the forces of populism seem to be waning, said
Luca Paolini, chief strategist at Pictet Asset Management, a U.K.-based firm
that manages $165 billion in client assets. He pointed to the Dutch elections
last month, where a candidate who ran on the pledge to pull the Netherlands
from the European Union, lost.
"This surge is fading," he said. "Maybe it's too early too early to
celebrate, but that's what the market is pricing in."
Paolini cautioned that political risks still remain: Not only is there the
runoff election for France in coming weeks, but there is also the general
election in June. And other elections may loom even larger for the future of
the European Union, such as next year's Italian vote.
EUROPE RIDING HIGH: France's CAC 40 index jumped 4.1 percent and flirted
through the day with its highest closing level since 2008. Germany's DAX jumped
3.4 percent and the FTSE 100 in London rose 2.1 percent.
Asian markets also rose. Japan's Nikkei 225 index climbed 1.4 percent, and
Hong Kong's Hang Seng and South Korea's Kospi indexes both added 0.4 percent.
FEELS CALM: Many investors see the Vix index as a measure of the market's
anxiety level because it shows how expensive prices are to buy protection
against upcoming drops in stocks. The Vix plunged 15 percent.
Demand for other investments that investors flock to when they're fearful
also fell. The price of gold fell $12.80 to $1,276.30 per ounce.
Prices for Treasury bonds dropped, which sent yields higher. The yield on
the 10-year Treasury climbed to 2.26 percent from 2.25 percent late Friday.
BANKING ON IMPROVEMENT: Any rise in bond yields recently has fed into
immediate gains for bank stocks, and Monday fit the pattern again. Higher
interest rates mean banks can charge more for loans and reap bigger profits.
Financial stocks in the S&P 500 jumped 2.1 percent, by far the biggest gain
among the 11 sectors that make up the index. Bank of America surged 4 percent,
JPMorgan Chase rose 3.6 percent and SunTrust Banks gained 3.5 percent.
TOPS: The top-performing stock in the S&P 500 was C.R. Bard, which surged
$50.68, or 20 percent, to $303.75. It agreed to be acquired by Becton
Dickinson, a medical technology competitor, in a deal the companies are valuing
at $24 billion in cash and stock.
Becton Dickinson fell $7.34, or 4 percent, to $177.95.
EARNINGS: Companies are in the midst of reporting their results for the
first three months of the year, and analysts expect this to be the strongest
showing in years.
Hasbro jumped $5.63, or 5.9 percent, to $101.66 after reporting stronger
quarterly revenue and profits than analysts had forecast. Illinois Tool Works
rose $5.70, or 4.2 percent, to $140.57 after also surprising analysts with a
EURO RISING: With expectations strengthening that the shared European
economy will remain intact, the euro rose to $1.0852 from $1.0695 late Friday.
The dollar climbed to 109.78 Japanese yen from 109.21, and the British pound
slipped to $1.2783 from $1.2795.
COMMODITIES: Benchmark U.S. crude oil fell 33 cents to $49.29 per barrel.
Brent crude, which is used to price international oils, fell 33 cents to $51.63
Natural gas fell 2 cents to $3.08 per 1,000 cubic feet, silver fell 2 cents
to $17.84 per ounce and copper added a penny to $2.55 per pound.
CHINA BLUES: Chinese stocks didn't join the global wave higher on Monday.
Benchmarks in Shanghai and Shenzhen fell by more than 1 percent in their worst
losses in four months after regulators warned over the weekend of risks in the
financial industry. The Chinese Insurance Regulatory Commission, in a notice
carried by the state-run Xinhua News Agency, ordered insurers to improve risk
controls amid a crackdown on misuse of capital.