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US: French election results catapult Wall Street higher; Nasdaq sets record
[NEW YORK] US stocks rallied on Monday, tracking a relief rally that swept through Asian and European markets, after centrist candidate and market favorite Emmanuel Macron won the first round of the French presidential election.
Pro-EU Macron is expected to beat right-wing rival Marine Le Pen in a deciding vote on May 7 according to polls, which were mostly right about the first-round results.
"This alleviates fears that we were going to have to navigate a French exit (from) the European Union," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
"This is a classic relief rally showing up most in financials," he said.
"We cleared this hurdle and now it's a little bit more clear running."
European banks jumped 7.4 per cent while banks on the S&P 500 added 2.8 per cent.
The moves across markets point to an unwinding of bets taken in the past few days when traders had turned defensive ahead of the French election.
The Dow Jones Industrial Average rose 216.13 points, or 1.05 per cent, to 20,763.89, the S&P 500 gained 25.46 points, or 1.08 per cent, to 2,374.15 and the Nasdaq Composite added 73.30 points, or 1.24 per cent, to 5,983.82.
MSCI's gauge of stocks across the globe gained 1.56 per cent to 453.5 after touching a record high of 453.7.
US investors are also gearing up for the busiest earnings week in at least a decade, with over 190 S&P 500 members, including heavyweights Alphabet and Microsoft, due to report results this week.
"Earnings are coming in better than expected and this is for a quarter where estimates were pretty tight. We didn't see much pullback with estimates in the course of the quarter, so expectations were high and we're beating them," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
Of the 100 S&P 500 companies that have reported results so far, 77 per cent have beaten profit expectations, according to Thomson Reuters I/B/E/S. This has helped lift the blended profit growth estimates to 11 per cent from 10 per cent at the start of the earnings season.
Medical device maker C R Bard jumped almost 20 per cent to US$302.41 after US medical equipment supplier Becton Dickinson said it would buy Bard for US$24 billion.
Defensive trades suffered as traders embraced risk. Spot gold dropped 0.6 per cent to US$1,276.10 an ounce. The safe-haven Japanese yen weakened 0.58 per cent versus the greenback at 109.73 per US dollar. The CBOE Volatility index ended at 10.84, its lowest since Feb 14.
Advancing issues outnumbered declining ones on the NYSE by a 2.47-to-1 ratio; on Nasdaq, a 2.61-to-1 ratio favoured advancers.
The S&P 500 posted 72 new 52-week highs and two new lows; the Nasdaq Composite recorded 191 new highs and 43 new lows.
About 6.8 billion shares changed hands in US exchanges, above the 6.3 billion daily average over the last 20 sessions.