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Financial Markets 10/20 15:31
NEW YORK (AP) -- U.S. stocks rallied on Monday to the cusp of their records.
The S&P 500 climbed 1.1% and pulled within 0.3% of its all-time high set
earlier this month. The Dow Jones Industrial Average jumped 515 points, or
1.1%, and the Nasdaq composite gained 1.4%.
Apple led the way and rose 3.9% amid optimism about demand for its latest
iPhone design. It was the strongest force lifting the S&P 500 and set its own
record high.
Cleveland-Cliffs jumped 21.5% after the steel company's CEO, Lourenco
Goncalves, said it would provide details soon about a potential deal with a
major global steel producer that could mean bigger profits. He also said his
company has potentially found signs of rare earths at sites in Michigan and
Minnesota.
Such materials have grabbed the global spotlight after China recently put
curbs on the export of its own rare earths, a move that President Donald Trump
characterized as hostile. Trump's ensuing threat of higher tariffs triggered
big swings for Wall Street, but the concerns eased a bit after Trump said such
high tax rates on Chinese imports are unsustainable.
Another source of worry for Wall Street, from the banking industry, also
appears to be easing. Stocks of smaller and midsized banks climbed Monday,
recovering some of their losses after a couple raised alarm bells last week by
warning about potentially bad loans they've made.
Zions Bancorp. gained 4.7% Monday following its 5.1% drop last week, when it
said it had found "apparent misrepresentations and contractual defaults"
related to a couple borrowers.
Amazon's stock held up despite a widespread outage for its cloud computing
service that caused disruption for internet users around the world Monday.
Amazon's stock rose 1.6%.
All told, the S&P 500 added 71.12 points to 6,735.13. The Dow Jones
Industrial Average climbed 515.97 to 46,706.58, and the Nasdaq composite gained
310.57 to 22,990.54.
This week features a raft of big names reporting their latest quarterly
results, including Coca-Cola on Tuesday, Tesla on Wednesday and Procter &
Gamble on Friday.
The pressure is on companies broadly to show that their profits are growing
following a torrid run of 35% for the S&P 500 from a low in April. Delivering
bigger profits is one of the easiest ways for companies to quiet criticism that
stock prices have gone too high. The other is for stock prices to fall.
Corporate profit reports have also taken on more importance because they
offer windows into the strength of the U.S. economy when the U.S. government's
shutdown has delayed important economic updates.
That's making the job of the Federal Reserve more difficult, as it tries to
decide whether high inflation or the slowing job market is the bigger issue for
the economy. Fed officials have indicated they're likely to cut rates several
more times in order to give the economy a boost. But that could be a mistake if
inflation worsens, because low interest rates can push it even higher.
On Friday, the U.S. government will issue an update for inflation during
September. The report was supposed to arrive earlier in month, and the Social
Security Administration needs the numbers to calculate cost-of-living
adjustments for beneficiaries. But the government also said, "No other releases
will be rescheduled or produced until the resumption of regular government
services."
In the bond market, Treasury yields held relatively steady. The yield on the
10-year Treasury eased to 3.98% from 4.02% late Friday.
In stock markets abroad, indexes rose across much of Europe and Asia.
Japan's Nikkei 225 jumped 3.4%, after its governing Liberal Democrats found
a new coalition partner, securing support for its leader Sanae Takaichi to
become the country's prime minister. Investors expect Takaichi, who would also
be Japan's first female prime minister, to push for low interest rates, higher
government spending and other policies that could help the market.
Indexes rose 2.4% in Hong Kong and 0.6% in Shanghai after China reported its
economy grew at a 4.8% annual pace in the last quarter, supported by relatively
strong exports as companies increased shipments markets other than the U.S.
Still, it was the slowest pace in a year. The world's second-largest economy
is still struggling to emerge from a prolonged downturn in its property market
and to encourage consumers and businesses to spend more.
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AP Business Writers David McHugh and Elaine Kurtenbach contributed.
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