S&P 500 Rose to Record Highs amid Increased Risk Appetite
- Author: Zachary Reyes Sep 12, 2017,
Sep 12, 2017, 18:01
Risk sentiment received a further boost after Hurricane Irma struck the USA southeast with less force than once feared, scaling back estimates for economic damage. North Korea launching nuclear weapons, as well.
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The Dow Jones Industrial Average .DJI jumped 259.58 points, or 1.19 percent, to 22,057.37.
Demand for safer assets, including gold, also weakened after storm Irma wreaked less damage than feared in Florida.
Gains for bank stocks were more moderate than those for life insurance companies due to worries that a slowdown in the housing market will hold back loan growth, Scott said.
Global stocks seemed to give a sigh of relief on Monday, trading broadly higher as investors put risk back on the table. Home Depot dropped 1.29 dollars to 158.37 dollars and Lowe's declined 1.06 dollars, or 1.3%, to 77.50 dollars.
But Irma wasn't the only story impacting the markets. Apple, which will unveil its newest iPhone on Tuesday, rose 2.30 dollars, or 1.4%, to 160.93 dollars and Facebook rose 2.35 dollars, or 1.4%, to 173.30 dollars. This could provide some relief for United States markets which had been heavily sold, particularly for the insurance related sectors. "It is hard to understand why the simple lack of bad news is sending prices higher, but we must respect that fact - the momentum is still strong", said Wouter Sturkenboom, senior investment strategist at Russell Investments.
"But the market is still sensitive to risk-off news, maybe from North Korea, or from disappointing US economic data", he said.
Take a look at other parts of the market beyond the Dow and you'll clearly see fewer signs of investor anxiety.
Meanwhile, speculative investment in gold increased as hedge funds and money managers raised their net long position in COMEX gold for the eighth week in a row to the highest in almost a year.
"Markets have started the week in a positive fashion, with risk assets firmly in the driving seat at the expense of the commonly perceived havens such as gold, treasuries (US government bonds), and the yen", said Joshua Mahony, market analyst at IG traders. On the Nasdaq, 1,956 issues rose and 496 fell.
In late-morning trades, the benchmark S&P/ASX 200 Index is rising 27.70 points or 0.48 percent to 5,740.80, off a high of 5,742.20 earlier.
European Central Bank officials last week generally agreed their next move would be to cut their bond purchases and discussed a range of options, Media reported. In the U.S., bond prices fell, sending yields higher.
Banking stocks also had a good day, benefiting from a bounce in bond yields.
US crude oil prices settled 1.2 percent higher at $48.07 a barrel as USA refinery restarts and Saudi cut extension talks offset Hurricane Irma-related demand fears. Investors apparently feel no need to flock to safety. The yen and the Swiss franc, which traditionally rise when markets are volatile, both fell against the US dollar.