Published by Jessica Weisman-Pitts
Posted on October 17, 2022
By Stephen Culp
NEW YORK (Reuters) – U.S. stocks surged on Monday, following the example of their overseas counterparts as strong earnings and a policy reversal from Britain’s new finance minister stoked investor risk appetite.
All three major U.S. stock indexes surged through the starting gate with sharp gains, while Treasury yields eased and the dollar lost ground.
“More and more economists are embracing recession,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “This market has discounted the worst that could happen – a global recession.”
“Another factor is seasonal,” Cardillo added. “Usually when the market has discounted everything – and I believe it has – usually (the last months of the year) are positive for the stock market.”
Stocks were primed for a strong open after Britain’s new finance minister Jeremy Hunt scrapped Prime Minister Liz Truss’s proposed tax cuts and reined in her energy subsidies, while Bank of America Corp’s posted consensus-beating third quarter results, having benefited from a spate of interest rate hikes from the Federal Reserve.
The Dow Jones Industrial Average rose 522 points, or 1.76%, to 30,156.83; the S&P 500 gained 93.95 points, or 2.62%, to 3,677.02; and the Nasdaq Composite added 337.59 points, or 3.27%, to 10,658.98.
European stocks rallied on the UK’s financial policy reversal. [.EU]
“This lifted some clouds, but it doesn’t lift the political risk of this government staying in power for a sustained period of time,” Cardillo said.
Meanwhile, the easing yuan weighed on Asian markets.
The pan-European STOXX 600 index rose 2.11% and MSCI’s gauge of stocks across the globe gained 2.15%.
Emerging market stocks rose 0.42%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.1% lower, while Japan’s Nikkei lost 1.16%.
Treasury prices rose, tracking similar moves in the UK bond market, pushing benchmark Treasury yields lower for the first time in three days. [US/]
Benchmark 10-year notes last rose 11/32 in price to yield 3.961%, from 4.006% late on Friday.
The 30-year bond last rose 5/32 in price to yield 3.9651%, from 3.975% late on Friday.
Strength in the euro and sterling caused the greenback to lose ground against a basket of major world currencies.
The dollar index fell 0.88%, with the euro up 0.82% to $0.9799.
The Japanese yen strengthened 0.01% versus the greenback at 148.74 per dollar, while sterling was last trading at $1.1416, up 2.20% on the day.
China’s continuation of its loose monetary policy helped offset recession worries, sending crude prices higher. [O/R] [FRX]
U.S. crude rose 0.88% to $86.36 per barrel and Brent was last at $92.27, up 0.7% on the day.
Softness in the greenback gave a boost to gold prices. [GOL]
Spot gold added 1.3% to $1,663.10 an ounce.
(Reporting by Stephen Culp Additional reporting by Marc Jones in London; Editing by Mark Potter)
