Twenty nine out of thirty Dow components ended higher with only Nike in the red
US stocks rose for a fifth session in a row on Monday, 05 October 2015, its longest winning streak this year, as a string of economic data appeared to push back the timing of a Federal Reserve rate hike to 2016. The weaker-than-projected jobs report fueled speculation that the Federal Reserve may be more circumspect about tightening monetary policy. The rally comes on the heels of one of the biggest reversals for stocks in four years, when the market swooning from a weak jobs report turned sharply positive toward the end of Friday's close of trading.
The Dow Jones Industrial Average added 304.06 points, or 1.9%, to 16,776.43. The Nasdaq Composite advanced 73.49 points, or 1.6%, at 4,781.26. The S&P 500 rose 35.69 points, or 1.8%, to 1,987.05, with all 10 sectors higher after health-care sector rebounded.
Twenty nine out of thirty Dow components ended higher with only Nike in the red.
The Monday buying frenzy was not fueled by quarterly earnings as the first portion of the reporting period is still two weeks away. Instead, the advance was a continuation of the Friday rally, which was predicated on the belief that a disappointing September Nonfarm Payrolls report would prevent the Federal Reserve from raising rates at the October meeting.
With global investors showing hope for more monetary stimulus, the spotlight will be on the Bank of Japan considering the central bank will begin a two-day policy meeting on Tuesday. Last week, there were reports that the BoJ is not looking to increase the size of its quantitative and qualitative easing program, but some investors remain hopeful for a surprise to the contrary.
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Cyclical sectors were at the forefront of the Monday advance with energy (+3.0%) holding the lead throughout the session. The sector rallied behind crude oil early on and continued its charge into the afternoon even as WTI crude retreated from its best level of the day, ending higher by 1.6% at $46.26/bbl. Elsewhere, top-weighted technology and financials spent the day just ahead of the broader market while the industrial sector was nearly as strong as energy.
Also of note, the technology sector managed to spend the day ahead of the broader market even though Apple struggled to keep pace. The sector heavyweight underperformed after Digitimes reported that new iPhone sales in Japan have not kept up with demand observed after the previous release.
Today's rally in equities coincided with daylong selling in the Treasury market that pushed the 10-yr note below Friday's low. As a result, the benchmark yield rose seven basis points to 2.06%.
Bullion prices settled higher on Monday, 05 October 2015. Gold went up extending gains to a second straight session as traders continued to mull the impact of last week's disappointing monthly U.S. jobs report and the likelihood that the Federal Reserve will continue to delay a hike in interest rates.
Gold futures for December delivery rose $1, or 0.1%, to settle at $1,137.60 an ounce on Comex. Prices rallied on Friday, putting an end to a losing streak that spanned five sessions in a row. December silver picked up 44.5 cents, or 2.9%, to $15.708 an ounce, finishing higher after a 5.2% rally on Friday.
Oil futures finished at their highest level in almost two weeks on Monday, 05 October 2015 at Nymex. Prices rose on expectations that China may take actions to stimulate its economy, which might help boost energy demand. But a continuing market-share and price war among oil producers may have capped price gains for the session. Saudi Arabia unexpectedly announced Sunday that it will slash its oil prices.
November West Texas Intermediate crude settled at $46.26 a barrel on the New York Mercantile Exchange, up 72 cents, or 1.6%, after touching a high near $47 a barrel.
Trading volume was well above average as more than a billion shares changed hands at the NYSE floor.
Economic data was limited to the ISM Services Index, which declined to 56.9 in September from 59.0 while the consensus expected a drop to 58.0. Although many of the sub-categories in the index showed sharp declines in September, there wasn't a prevalence of contractions like those that plagued the ISM Manufacturing Index. The services sector remains much more robust than the manufacturing sector.
Tomorrow, the August Trade Balance will be reported at 8:30 ET.
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