Wall Street stocks rose to record highs on Monday, boosted by expectations for continued monetary policy easing around the globe and a jump in oil prices on speculation the world’s top producers may be open to cutting output. The US S&P 500, Dow and Nasdaq stock indexes all hit all-time intraday highs. A strong monthly jobs report on Aug. 5 boosted optimism about the US economy, driving all three major indexes to close at record levels last Thursday for the first time since 1999.
The S&P 500 index has notched 13 record intraday highs since July, including Monday’s. “Our sense is that we’re still in this Goldilocks period where it’s a sweet spot for equities and that will not change probably until the next rate hike,” said Mike Bailey, director of research at FBB Capital Partners.
The Dow Jones industrial average rose 72.42 points, or 0.39 percent, to 18,648.89, the S&P 500 gained 7.77 points, or 0.36 per cent, to 2,191.82 and the Nasdaq Composite added 32.63 points, or 0.62 per cent, to 5,265.52.
The Federal Reserve releases on Wednesday minutes of its July policy meeting that could provide clues on the US central bank’s plans to raise rates and its view on the health of the economy.
The expected easing posture of central banks globally suggested to investors that the Fed may be slower to raise the nation’s short-term interest rates and that could be reflected in the minutes, analysts said. “There’s growing realization that the events in foreign economies have far more impact on US rates than previously accepted,” said Michael Matousek, head trader at US Global Investors Inc in San Antonio, citing a research note. “People are thinking overseas troubles are going to keep rates lower and that’s been keeping an underlying bid to the (stock) market.”
The jump in US equities helped underpin markets in London and Frankfurt, which added to gains and were up 0.36 per cent and 0.24 per cent respectively. The pan-European FTSE 300 edged up 0.02 per cent. Chinese equity markets had strong gains as the blue-chip CSI300 Index jumped 3 percent to a seven-month high amid speculation more stimulus would be forthcoming from Beijing after weaker-than-expected July data.
A subdued second-quarter economic reading in Japan left the Nikkei down 0.3 per cent and suggested the Bank of Japan could again ease monetary policy soon. MSCI’s all-world equity index rose 0.27 per cent.
The expectation for continued loose monetary policy and appetite for stocks pushed US Treasury prices down, with benchmark yields rising from near two-week lows. Analysts said that hedging linked to this week’s corporate bond supply also spurred selling in Treasuries.
The benchmark 10-year Treasury note fell 10/32 in price to yield 1.55 per cent.
Yields on British 10-year gilts touched record lows on Monday, falling to 0.503 per cent. They have more than halved since Britain’s surprise vote in June to exit the European Union, having been up at 1.39 percent just before it.
Reduced expectations for Fed policy moves also hurt the US dollar, which has fallen against a basket of currencies in four of the last five trading sessions.
The dollar index, which tracks the greenback against six major world rivals, fell 0.12 per cent to 95.604. “As it stands now, market participants see a less than fifty-fifty chance of rates rising by December. The dollar will continue to struggle until that chance rises meaningfully,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Brent crude futures rose $1.25 to $48.22 a barrel, while US crude rose to $45.70.