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A gauge of stocks across the world rose on Monday, led by a rebound on Wall Street, even as rising COVID-19 cases threaten to stall the recovery of the world’s largest economy.

Contracts to buy U.S. previously owned homes rose by the highest percentage on record in May. But they remained below their February level and were down compared with May 2019, which also kept alive expectations for even more economic stimulus.

“The market believes that the (Federal Reserve) has its back,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

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“If things get really bad, the Fed will step in with additional monetary easing and basically reach into their bag of tricks to do whatever they need to support the market.”

Confirmed COVID-19 cases worldwide rose past 10 million and deaths surpassed 500,000 on Sunday. The relentless spread of the new coronavirus in the United States, Latin America and elsewhere curbed optimism over the global economy and raised worries that some reopening plans will be delayed.

Canada’s main stock index gained on Monday as energy stocks were lifted by higher oil prices.

The Toronto Stock Exchange’s S&P/TSX composite index was up 200.74 points, or 1.32%, at 15,389.72.

The energy sector climbed 3.3%, helped by gains in oil prices.

Domestic data showed that producer prices in Canada rose by 1.2% in May from April on higher prices for meat, fish, and dairy products, as well as energy and petroleum products.

The materials sector, which includes precious and base metals miners and fertilizer companies, added 1% as gold prices steadied on Monday, holding close to a near eight-year peak scaled last week.

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Financial stocks increased 1%, while the industrial and utility sectors rose 1.1% and 1.9%, respectively.

The Canadian dollar was little changed against the greenback on Monday, holding near its weakest level since the start of June as the lingering impact of a ratings downgrade offset evidence that Canada’s economy is recovering from the coronavirus crisis.

The Canadian dollar was trading nearly unchanged at 1.3689 to the greenback, or 73.05 U.S. cents. The currency traded in a range of 1.3646 to 1.3704, after having touched on Friday its weakest intraday level since June 1 at 1.3715.

“I think the CAD is still hungover from last week’s sovereign rating cut from AAA by Fitch,” said Tony Valente, senior FX dealer at AscendantFX.

Fitch last Wednesday cut Canada’s rating to “AA+” from “AAA,” making it the first time since August 2004 that the ratings agency did not give Canada top marks. Canada had been one of a handful of countries with a AAA rating from all three of the main agencies.

Quarter-end rebalancing may also have weighed on the loonie but the pressure is likely to be temporary, Valente said.

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Wall Street stocks closed higher on Monday and the S&P 500 was poised to clinch its biggest quarterly percentage gain since 1998 as investors hoped for a stimulus-backed economic rebound, while a surge in Boeing shares helped boost the blue-chip Dow.

The planemaker’s shares jumped more than 13% after a 737 MAX took off on Monday from a Seattle-area airport on the first day of certification flight testing with U.S. Federal Aviation Administration and company test pilots, a crucial moment in Boeing’s worst-ever crisis.

A spike in virus infections in Southern and Western states last week sent the S&P 500 down nearly 3%, but the threat of a deeper-than-feared recession has led investors to expect more stimulus measures from the Federal Reserve or Congress.

But the sting of rising infections was blunted by the pricing of the antiviral drug remdesivir, which has been shown to alter the course of COVID-19, by Gilead Sciences. The company also agreed to send nearly all of its supply of the drug to the United States over the next three months.

While the S&P 500 is up more than 17% for the quarter, the index is down slightly for the month, as stocks have been buffeted by signs of progress in battling the coronavirus and a recent resurgence in cases.

“For all the up, for all the down, volatility isn’t going anywhere,” said Willie Delwiche, investment strategist at Baird in Milwaukee. “Maybe that is the lesson of June, these one-day moves seem impressive but you string 20 of them together and you’ve got nothing.”

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Unofficially, the Dow Jones Industrial Average rose 579.5 points, or 2.32%, to 25,595.05, the S&P 500 gained 44.26 points, or 1.47%, to 3,053.31 and the Nasdaq Composite added 116.93 points, or 1.2%, to 9,874.15.

Each of the 11 major S&P sectors was in positive territory, led by industrial stocks.

The benchmark S&P 500 has rebounded about 36% from its March 23 closing low. Monday’s gains pushed the index above its 200-day moving average, a technical support level it had fallen through with last week’s decline.

Data on Monday showed contracts to buy previously owned homes rebounded by the most on record in May, suggesting the housing market was starting to turn around. Later this week, investors will focus on employment and consumer confidence data.

Still, Wall Street was looking for more stimulus measures to buttress the economy. Analysts at Morgan Stanley said a further injection of cash was critical to the bank’s thesis for a “V”-shaped U.S. economic recovery.

The BlackRock Investment Institute downgraded U.S. equities to “neutral,” citing risks of fading fiscal stimulus, an extended epidemic as well as renewed U.S.-China trade tensions.

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Although a $3 trillion aid bill was passed by the House of Representatives in May, the Republican-controlled Senate has not taken up the package and lawmakers are not expected to move toward another coronavirus bill until sometime in July.

Coty Inc jumped after the company said it would buy a 20% stake in Kim Kardashian West’s makeup brand for $200 million.

Oil prices rose about $1 a barrel on Monday, after bullish data from Asia and Europe, but investors are wary about sharp spikes in new coronavirus infections around the world.

Brent crude gained 69 cents, or 1.7%, to settle at $41.71 a barrel. U.S. crude rose $1.21, or 3.1%, to settle at $39.70 a barrel.

The recovery of economic sentiment in the euro zone intensified in June with improvements across all sectors, European Commission data showed on Monday. Overall sentiment rose to 75.7 points in June from 67.5 in May, though still short of expectations.

In China, profits at industrial firms rose for the first time in six months in May, suggesting the country’s economic recovery is gaining traction.

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Reuters.

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