Stimulus hopes buoy Wall Street, financials lead gains
(Reuters) – Wall Street’s main indexes edged higher on Monday as investors bet on increased chances of monetary stimulus from central banks around the world to boost slowing growth.
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., September 9, 2019. REUTERS/Brendan McDermid
A rise in U.S. Treasury yields, with those on 10-year notes US10YT=RR climbing to three-week peaks, led investors to switch from bonds to riskier assets. Big lenders, including Goldman Sachs (GS.N), were among the biggest beneficiaries. [US/]
Financial stocks .SPSY rose 1.39%, the biggest boost among the 11 major S&P sectors with banks .SPXBK gaining 2.67%.
“It does feel that sentiment globally is firmer. The market is expecting some easing from the European Central Bank at its meeting this week and there has also been a de-escalation of trade tensions,” said Gennadiy Goldberg, senior rates strategist, at TD Securities in New York.
Federal Reserve Chairman Jerome Powell said late last week the central bank would “act as appropriate” to sustain economic expansion, a phrase that financial markets have read as signs of an interest rate cut.
The Fed cut interest rates for the first time since 2008 in July and bets of another cut rose after data on Friday showed the U.S. economy added fewer-than-expected jobs in August.
U.S. Treasury Secretary Steven Mnuchin said he did not see the threat of a recession as the Trump administration seeks to revive trade negotiations with China, adding that he expected a positive year ahead for the U.S. economy.
“Investors are hopeful that both sides will get close to agreeing on a cosmetic deal or maybe a truce,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Escalating Sino-U.S trade tensions and the inversion of a key part of the U.S. yield curve drove a sell-off in August. However, Monday’s gains pushed the S&P 500 to just 1.5% below its record high.
Energy stocks .SPNY led gains on the S&P 500 with a 1.97% rise, as oil prices got a boost from the new Saudi energy minister committing to output cuts. [O/R]
At 11:47 a.m. ET, the Dow Jones Industrial Average .DJI was up 70.37 points, or 0.26%, at 26,867.83, the S&P 500 .SPX was up 3.60 points, or 0.12%, at 2,982.31 and the Nasdaq Composite .IXIC was up 7.10 points, or 0.09%, at 8,110.17.
Among other stocks, AT&T Inc (T.N) gained 2.66% after shareholder Elliott Management Corp disclosed a $3.2 billion stake in the company and pushed for changes.
Boeing Co (BA.N) fell 1.10% after it suspended load testing of its new widebody 777X aircraft over the weekend as media reports said a cargo door failed in a ground stress test.
Amgen Inc (AMGN.O) fell 3% after analysts raised questions about data on the company’s lung cancer drug, dragging the healthcare sector .SPXHC down 1.14%.
Shares of Fred’s Inc (FRED.O) plunged 46.27% to a record low after the discount retailer said it filed for Chapter 11 bankruptcy protection.
Advancing issues outnumbered decliners by a 1.60-to-1 ratio on the NYSE and by a 1.67-to-1 ratio on the Nasdaq.
The S&P index recorded 33 new 52-week highs and two new lows, while the Nasdaq recorded 47 new highs and 41 new lows.
Reporting by Uday Sampath in Bengaluru; Additional reporting by Gertrude Chavez-Dreyfuss; Editing by Arun Koyyur and Saumyadeb Chakrabarty