Stocks break 9-day slump with huge gains
The U.S. stock market rebounded from a nineday losing streak Monday, posting its biggest gain in eight months and driving the Dow Jones industrial average up more than 370 points.
Financial stocks led the broad market rally, which erased more than half of the losses racked up by the Standard & Poor’s 500 index since October 25.
The gains came as investors mostly focused on the latest developments in the U.S. presidential race a day before the general election.
The FBI announced late Sunday that its review of newly discovered Hillary Clinton emails found no evidence warranting charges. That appeared to ease the market’s anxiety, which ratcheted up in recent weeks over signs that the presidential race was tightening, triggering the longest losing streak for the S&P 500 since 1980.
“Clearly, the market is more comfortable with a Clinton win, only because they feel like they know her policies a little bit better,” said JJ Kinahan, chief strategist at TD Ameritrade. “With (Donald) Trump, it’s a little bit more of a guessing game, perhaps, as to what his policies will be.”
The Dow gained 371.32 points, or 2.1 percent, to 18,259.60. The S&P 500 index rose 46.34 points, or 2.2 percent, to 2,131.52. Heading into Monday, the index had been down 66 points over the previous nine trading days. The Nasdaq composite index added 119.80 points, or 2.4 percent, to 5,166.17.
The major stock indexes were headed higher from the get-go Monday, moving sharply in premarket trading overnight as investors sized up the latest development in the U.S. presidential race. The news also helped lift the key stock indexes in Europe.
Clinton appeared to be holding on to an edge in the final stretch leading into Tuesday’s general election a day after FBI Director James Comey told lawmakers that a review of new Clinton emails did not change the bureau’s recommendation that she should not face charges.
Clinton’s solid lead began to shrink on Oct. 28 after the FBI initially notified Congress that it was going to review the emails. As the polls tightened, uncertainty over the outcome of the election rattled financial markets, which see Clinton as likely to maintain the status quo, while Trump’s policies are less clear.
Banks and health care companies rose more than the rest of the market. Goldman Sachs and UnitedHealth Group had some of the biggest gains in the Dow. Goldman climbed $5.56, or 3.2 percent, to $181.48, while UnitedHealth added $4.22, or 3.1 percent, to $141.93.
“This is not a rational market. This is a reaction to less uncertainty,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. “In those kinds of markets, people are jumping into stocks that they think are cheap. And what are the cheapest right now? Financials and health care.”
Several pharmaceutical companies were also among Monday’s biggest gainers. Regeneron Pharmaceuticals gained $24, or 7 percent, to $365.39, while Biogen climbed $18.62, or 6.7 percent, to $295.62.
The VIX, a measure of how much volatility investors expect to see in the market over the next 30 days, slumped 16.9 percent Monday after surging 40 percent last week to its highest level since June, when Britain voted to leave the European Union.
The slide in the VIX reflected less anxiety among investors. Safe haven investments also slumped as investors felt comfortable taking on more risk. Bond prices fell, driving the yield on the 10-year Treasury note up to 1.83 percent from 1.78 percent late Friday. Utilities and phone stocks, two other havens investors seek when they expect turmoil, lagged the market.
Trader Mark Puetzer works on the floor of the New York Stock Exchange on Monday.