Wall Street rallies as investors cheer global stimulus efforts

NEW YORK: U.S. stocks climbed on Monday as reports of stimulus efforts in China and Germany calmed fears of a severe downturn in the global economy that were stoked last week as bond yields fell.

The benchmark S&P 500 was on track to recover most of its losses following Wednesday’s brief inversion of the yield curve between 2-year and 10-year Treasuries, commonly viewed as an indicator of a recession within the next two years. After falling nearly 3% on Wednesday, the S&P 500 has risen for the last three sessions.

China’s central bank unveiled a key interest rate reform on Saturday to help steer borrowing costs lower for companies. On Sunday, German Finance Minister Olaf Scholz suggested that Berlin could make available up to 50 billion euros ($55 billion) of extra spending.

“Those are positive stories, and it’s fostered a risk-on environment that has persisted throughout the day,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. “Investors are glad to see that countries are recognizing the risks out there.”

Shares of Apple Inc (AAPL.O) provided the biggest boost to the three main Wall Street indexes. President Donald Trump said on Sunday that he had spoken with Apple Chief Executive Officer Tim Cook, who “made a good case” that tariffs could hurt Apple.

Technology shares also rose as Washington extended a reprieve given to Huawei Technologies [HWT.UL] that permits the Chinese firm to buy supplies from U.S. companies so it can service existing customers.

The S&P 500 technology index rose 1.5%, while the Philadelphia semiconductor index .SOX rose 1.8%.

The Dow Jones Industrial Average .DJI rose 266.72 points, or 1.03%, to 26,152.73, the S&P 500 .SPX gained 36.54 points, or 1.26%, to 2,925.22 and the Nasdaq Composite .IXIC added 109.85 points, or 1.39%, to 8,005.84.

All of the 11 major S&P sectors were higher. Energy shares .SPNY, which rose 2.3% as oil prices advanced, led S&P sectors in percentage gains. Reflecting Monday’s risk-on sentiment, the defensive real estate .SPLRCR and utilities .SPLRCU sectors posted the smallest percentage gains.

Given concerns about economic growth, investors have looked closely for cues from the Federal Reserve on monetary policy. In July, the U.S. central bank cut interest rates for the first time in more than a decade.

Wednesday’s release of minutes from the Fed’s July policy meeting, as well as Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday, might provide indications on whether the central bank will cut rates further, investors said.

Shares of Estee Lauder Cos Inc (EL.N) jumped 12.4% to a record high as the beauty company forecast full-year revenue and profit above estimates, bolstered by booming demand for its premium skincare products in the Asia-Pacific region.

Advancing issues outnumbered declining ones on the NYSE by a 2.91-to-1 ratio; on Nasdaq, a 2.71-to-1 ratio favored advancers.

The S&P 500 posted 53 new 52-week highs and one new low; the Nasdaq Composite recorded 74 new highs and 52 new lows.