US stocks close higher as financials and energy lead broad rally

New York  — Wall Street rallied to close higher on Monday as investors sought bargains among sectors hardest-hit by the coronavirus recession, now limping towards its ninth month.

All three major US stock indices made solid gains on the heels of the longest weekly losing streak in over a year for both the S&P 500 and the Dow.

But financials and energy, which suffered the most bruising blows from the economic shutdown, enjoyed the largest percentage gains among major S&P 500 sectors, all of which ended the session in the black.

However, even with Monday’s jump, the indices are only days away from closing the books on their first monthly declines since March, when markets were sent into a free fall by pandemic-related lockdowns.

“Given that it’s been a weak month, some rebalancing may be occurring,” Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, said. “The rebalancing would move allocations to equities and some of that may be happening today.”

The third quarter also draws to a close on Wednesday, and despite September’s expected loss, the S&P and the Nasdaq are on course for their best two-quarter winning streaks since 2009 and 2000, respectively.

Market leaders Apple, Amazon  and Microsoft  gave the biggest boost to the S&P 500 and the Nasdaq.

The lack of a Covid-19 vaccine and an additional fiscal stimulus package from Washington have weighed on the markets in recent sessions.

But US House of Representatives Speaker Nancy Pelosi said in an interview that stimulus talks with treasury secretary Steven Mnuchin were due to continue on later on Monday, suggesting a possible progress to end the stalemate.

“I’m not sure there’s any chance of it happening before the end of the year but it’s in the news and giving some traders some confidence,” said Ghriskey.

 Chinese industrial data released at the weekend showed profits grew for the fourth straight month, evidence of progress in the global recovery from the pandemic recession.

The Dow Jones Industrial Average rose 410.1 points, or 1.51%, to 27,584.06, the S&P 500 gained 53.14 points, or 1.61%, to 3,351.6 and the Nasdaq Composite added 203.96 points, or 1.87%, to 11,117.53.

American Airlines announced late on Friday that it has secured a $5.5bn government loan, and might access more. The news sent the commercial carrier’s stock up 3.8%.

This also gave a lift to the broader airline sector. The S&P 1500 Airlines index closed 4.1% higher.

Boeing extended Friday’s gains, rising 6.4% after Federal Aviation Administration Chief Steve Dickson said the agency would conduct a 737 MAX evaluation flight this week.

Devon Energy   said it would buy peer WPX Energy Inc for $2.56bn, sending their shares jumping 11.1% and 16.4%, respectively.

Ride-hailing platform Uber Technologies rose 3.2% after a judge ruled the company could resume operations in London.

Volume on US exchanges was 8.74-billion shares, compared with the 10.05-billion average over the past 20 trading days.

Reuters