The S&P 500 surged on Monday in its strongest one-day gain since June as bond markets calmed after a month-long selloff, while another COVID-19 vaccine getting U.S. approval and fiscal stimulus bolstered expectations of a swift economic recovery.
Canada’s benchmark stock index also rallied, posting its best day since Feb. 1. The S&P/TSX Composite Index closed up 240.06 points, or 1.33%, to 18,300.32. It was a broad advance, with only the materials sector being left out amid modest weakness in gold prices. Industrials rose 2.63% and technology 2.34%.
On Wall Street, Johnson & Johnson ended up 0.5%, but off earlier highs, after it began shipping its single-dose vaccine after it became the third authorized COVID-19 vaccine in the United States over the weekend.
President Joe Biden scored his first legislative win as the House of Representatives passed his US$1.9 trillion coronavirus relief package early Saturday. The bill now moves to the Senate.
U.S. bond yields eased after a swift rise last month on expectations of accelerated inflation due to bets on an economic rebound. The U.S. 10-year treasury yield dipped to 1.449% after hitting a one-year high of 1.614% last week. Canadian five- and 10-year government bond yields also eased Monday.
“The sentiment is risk-on with more investors showing interest towards cyclical stocks while a positive vaccination drive and better macro numbers are hinting towards a better growth environment,” said Keith Buchanan, portfolio manager at Globalt in Atlanta.
Data showed U.S. manufacturing activity increased to a three-year high in February amid an acceleration in new orders.
All 11 S&P 500 sectors rallied, led by financials and technology.
Apple Inc, Microsoft Corp, Facebook Inc and Amazon.com Inc bounced back after a selloff last week in tech stocks. Apple rose over 5% and was the strongest contributor to the S&P 500′s gains.
In extended trade, Zoom Video Communications jumped 10% following its quarterly report.
The S&P 500′s rebound from its 50-day moving average, touched after Friday’s decline, is a bullish sign that is adding to investors’ enthusiasm, said CFRA Research Chief Investment Strategist Sam Stovall.
“It’s a positive signal, at least in the near term, that the recent weakness has dissipated,” Stovall said.
The Dow Jones Industrial Average surged 1.95% to end at 31,535.51 points, while the S&P 500 gained 2.38% to 3,901.82.
The Nasdaq Composite jumped 3.01% to 13,588.83.
The Russell 2000 index of smaller companies surged 3.37%, putting its gain in 2021 at over 15%, compared with the S&P 500′s gain of about 4% in the same period.
Boeing Co jumped 5.8% after United Airlines Holdings Inc ordered 25 new 737 MAX aircraft and moved up the delivery of others as it prepares to replace aging jets and meet expected post-pandemic growth in demand.
Warren Buffett’s enthusiasm for the future of the United States and his company Berkshire Hathaway Inc has not been dimmed by the coronavirus pandemic, according to his annual letter to investors. Berkshire’s shares rallied 3.6%.
Oil prices fell more than 1% amid fears that Chinese oil crude consumption is slowing and that OPEC may increase global supply following a meeting this week.
Brent crude settled at $63.69 a barrel, falling 73 cents, or 1.1%, and U.S. West Texas Intermediate (WTI) crude settled at $60.64 a barrel, losing 86 cents, or 1.4%.
China’s factory activity growth slipped to a nine-month low in February, sounding alarms over Chinese crude buying and pressuring oil prices.
“There’s some talk that their strategic reserves are filled up, and so some people are betting against the Chinese continuing to drive oil prices,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Investors were also concerned that the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, would soon increase oil output.
“The worry is that that’s going to end up adding as much as 1.5 million barrels to the market,” said Bob Yawger, director of energy futures at Mizuho. “They have to construct some kind of story to bring those barrels back.”
OPEC oil output fell in February as a voluntary cut by Saudi Arabia added to agreed reductions under a pact with allies, a Reuters survey found, ending a run of seven consecutive monthly increases.
The group meets on Thursday and could discuss allowing as much as 1.5 million barrels per day of crude back into the market.
The April gold contract was down US$5.80 at US$1,723.00 an ounce and the May copper contract was up two cents at US$4.11 a pound.
Advancing issues outnumbered declining ones on the NYSE by a 3.81-to-1 ratio; on Nasdaq, a 4.29-to-1 ratio favored advancers.
The S&P 500 posted 48 new 52-week highs and no new lows; the Nasdaq Composite recorded 197 new highs and 17 new lows.
Volume on U.S. exchanges was 12.1 billion shares, compared with the 15.1 billion average for the full session over the last 20 trading days.
Read more: Stocks that saw action on Monday - and why
Reuters, Globe staff
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