Wall St up on deals, bonds up on ECB; Brent slides

S&P 500 ends within 2% of its record high set last week

US stocks rose on Monday on the back of billion-dollar M&A deals, while US and euro zone bond prices rose as the European Central Bank started its bond-buying programme.

Benchmark Brent crude prices fell on concern that the ECB move implied deflationary pressures, while US crude rose on bullish storage data, narrowing the gap between the two benchmarks.

Deal news buoyed Wall Street after two consecutive weekly losses, with the S&P 500 index ending within 2% of its record high set last week. Simon Property Group Inc bid $14.4 billion for fellow mall operator Macerich Co and Alcoa Inc agreed to buy titanium supplier RTI International Metals Inc .

 

On Friday, the index posted its largest daily decline in two months.

"We're seeing a little bit of a snapback from Friday's reaction to the jobs report. We're seeing a little of that reversion-to-the-mean trade coming back," said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston.

European shares ended lower as investors took profits after recent gains fuelled by optimism about the ECB's bond purchase programme, aimed at reviving inflation and economic growth. European and Asian stocks were also pressured by Friday's forecast-beating US jobs data, which stoked expectations the Fed would raise interest rates sooner. The data showed wage inflation pressures, however, were muted.

The Dow Jones industrial average rose 138.94 points, or 0.78%, to 17,995.72, the S&P 500 gained 8.17 points, or 0.39%, to 2,079.43 and the Nasdaq Composite added 15.07 points, or 0.31%, to 4,942.44.

The pan-European FTSEurofirst 300 index ended down 0.24% and Nikkei futures were little changed after sharp overnight losses in Tokyo. An MSCI gauge of stocks in major markets.

German 10-year yields >, the euro zone benchmark, fell 9 basis points to 0.31%. The US benchmark 10-year Treasury note > rose 15/32 in price to yield 2.1863%. The 30-year bond > rose 30/32, its yield at 2.7916%.

The US dollar was little changed against a basket of currencies after hitting an 11-1/2-year high earlier on Monday.

The euro > hit its lowest against the US currency since September 2003 at $1.0821 before edging up to $1.0852. The euro has been pressured by the divergent monetary policies of the Fed and the ECB.

"We seem to be taking a breather here, consolidating gains made off the nice jobs report. It is going to take something else to get us back down below the $1.0760 range, but we're not too sure what that immediate catalyst will be, given the economic calendar is light this week," said John Doyle, director of markets at Washington, D.C.-based Tempus Inc.

Brent crude prices fell, pressured as the ECB bond purchase scheme implies a certain level of deflation, said Bob Yawger at Mizuho Securities in New York.

Traders also cited uncertainty after US President Barack Obama issued an executive order declaring OPEC member Venezuela a national security threat.

"On the face of it, this executive order should have been bullish if anything to oil, if it impedes oil moving of Venezuela in any way," said Phil Flynn, analyst at Price Futures Group in Chicago.

"But Venezuela is such a basket case that people tend to worry about so many other things concerning that country, and that's possibly what caused the market to go down."

A senior US administration said the actions will have no direct impact on Venezuela's energy sector.

Brent crude oil fell 2.1% to $58.47 a barrel while U.S crude rose 0.75% to $49.98 a barrel.

Gold > was little changed at $1,167 an ounce, just above a three-month low.

Copper jumped 2.2% after closing on Friday with its largest weekly drop since January.