U.S. stocks set records as Irma and North Korea worries fade
NEW YORK — U.S. stocks rallied to record highs Monday as Hurricane Irma weakened without causing as much damage as many had feared, and a North Korean holiday passed without new missile launches. Financial and technology companies lead the way.
Investors were relieved as Irma, which is still deluging Florida and Georgia, didn’t appear to be as bad as it did in projections last week. Insurance companies jumped, especially smaller ones that do a lot of business in Florida. So did travel companies. Home improvement retailers fell. Their stocks had climbed recently as investors expected post-storm repairs to boost their business.
Tensions between the U.S. and North Korea have been on investors’ minds recently, and on Monday global markets advanced as the situation didn’t get any worse. In the U.S., bond prices fell, sending yields higher. That helped bank stocks because rising yields mean banks can charge higher interest rates on loans.
“This is what happens when the market sells off in the face of what is really an awfully good fundamental environment,” said Jim Paulsen, chief investment strategist for the Leuthold Group. He said investors are once again focused on strong economic growth in the U.S. and many other regions.
And while a gridlocked federal government hasn’t done much to stimulate the economy, Paulsen said the weakening dollar and falling interest rates could give U.S. businesses, especially technology companies, a big boost.
The Standard & Poor’s 500 index made its biggest gain since late April as it rose 26.68 points, or 1.1 percent, to finish at a record high of 2,488.11. The Dow Jones industrial average gained 259.58 points, or 1.2 percent, to 22,057.37. The Nasdaq composite jumped 72.07 points, or 1.1 percent, to 6,432.26, three points below the record closing high it set Sept. 1. The Russell 2000 index of smallercompany stocks added 15.40 points, or 1.1 percent, to 1,414.83.
That wiped out a month of losses linked to international tensions as well as worries about the lingering effects of Hurricanes Harvey and Irma, which are expected to slow the U.S. economy over the next few months.
Irma weakened shortly before it came ashore Sunday. It has caused severe flooding and knocked out power to millions. While the damage is still being assessed, insurers climbed Monday as investors anticipate they won’t have to pay out as much in claims as it looked like they would just a few days ago.
HCI Group jumped $5.38, or 17.5 percent, to $36.15 while Heritage Insurance gained $2.02, or 21.6 percent, to $11.39. Larger insurers also rallied. Reinsurance company XL Group advanced $1.94, or 5 percent, to $40.55 and Travelers gained $2.80, or 2.3 percent, to $122.56.
Investors also expected that travel-related companies won’t take such a big hit from the storm. Royal Caribbean Cruises jumped $4.24, or 3.6 percent, to $121.69 and American Airlines gained $2.26, or 5.2 percent, to $45.86. Travel booking site Priceline rose $30.29, or 1.6 percent, to $1,868.86.
Investors’ sense of relief also pushed orange juice futures a little lower. Futures had risen to $1.54 a pound Friday from $1.30 at the end of August and slipped to $1.51 a pound Monday.
North Koreans observed the 69th anniversary of the country’s founding, but did not test another intercontinental ballistic missile, as South Korea’s government had warned it might.