Market Wrap: Stocks Gain as Investors Eye Rate Hike Delay

Wall Street Financial Markets
Mark Lennihan/AP

By Sinead Carew

NEW YORK — U.S. stocks jumped Monday, with the SP 500 rising for the fifth day in a row, as rising oil prices boosted energy stocks and investors bet the Federal Reserve would not raise interest rates this year.

The SP’s five-day rise of 5.6 percent was its best five days back to late 2011. Monday saw strong increases in industrials, energy, telecommunications and materials stocks.

Friday’s nonfarm payrolls report for September showed job growth slowed in the last three months, increasing prospects that the era of near-zero interest rates will continue for a while yet.

The missed unemployment number means the Fed is probably going to hold longer.

“Wall Street’s favorite movie is nightmare on your street. The missed unemployment number means the Fed is probably going to hold longer,” said Stephen Massocca, Chief Investment Officer at Wedbush Equity Management in San Francisco.

The Fed, which hasn’t raised interest rates since June 2006, kept its benchmark rate unchanged in September, citing an uncertain global economic outlook and volatile markets.

Traders are pricing in only a 31-percent chance of a December hike, down from 44 percent before the jobs report, according to CME Group’s FedWatch program.

The Dow Jones industrial average (^DJI) rose 304.06 points, or 1.9 percent, to 16,776.43, the Standard Poor’s 500 index (^GSPC) gained 35.69 points, or 1.8 percent, to 1,987.05 and the Nasdaq composite (^IXIC) added 73.49 points, or 1.6 percent, to 4,781.26.

All 10 major SP sectors closed higher. The top boost for the industrial index’s 3-percent rise was General Electric (GE). It jumped 5.3 percent after Nelson Peltz’s Trian Fund Management disclosed a roughly 1 percent stake.

Energy stocks jumped 3 percent, boosted by a 1.6 percent rise in U.S. crude oil prices. They were helped by a rally in U.S. gasoline and Russia’s willingness to meet other major oil producers to discuss the market.

Biotech Slips

The Nasdaq biotechnology index fell 0.7 percent, breaking three days of gains. The index was crushed in the previous eight sessions on investor worries about drug price regulations.

The United States and other Pacific Rim countries reached a trade liberalization deal which fell short industry group expectations for drug patent protection.

With third-quarter earnings season starting this week, investors are beginning to factor in what could be the biggest fall in profits for SP 500 companies in six years. Wall Street expects SP 500 companies to report a 4.2 percent decline in earnings, according to Thomson Reuters data.

Advancing issues outnumbered declining ones on the NYSE by 2,734 to 373, for a 7.33-to-1 ratio; on the Nasdaq, 2,187 issues rose and 627 fell for a 3.49-to-1 ratio favoring advancers. The SP 500 posted 9 new 52-week highs and no new lows; the Nasdaq recorded 43 new highs and 33 lows.

Volume was strong with about 7.86 billion shares changing hands on U.S. exchanges, above the 7.32 billion average for the previous 20 sessions, according to Thomson Reuters (TRI) data.

Abhiram Nandakumar and Tanya Agrawal contributed reporting.

What to watch Tuesday:

  • The Commerce Department releases international trade data for August at 8:30 a.m. Eastern time.
  • PepsiCo (PEP) and Yum Brands (YUM) are scheduled to release quarterly financial results.

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