By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch
Fed's Yellen to meet with Obama; tech stocks lead gains; dollar
recovers somewhat against yen
U.S. stocks extended gains Monday, led by the technology sector,
after booking their worst week in two months, as oil futures
rallied and the dollar recovered some ground against the yen.
Investors were bracing for the start of first-quarter earnings
season, which kicks off with the results from Alcoa
(http://www.marketwatch.com/story/what-to-expect-from-alcoas-earnings-2016-04-08)
Inc. (AA) after the market close.
The S&P 500 climbed 12 points, or 0.6%, to 2,059, led by a
1% jump in technology stocks and a 0.9% rise in materials.
The Dow Jones Industrial Average gained 121 points, or 0.7%, to
17,698, led by gains in Intel Corp.(INTC) and Caterpillar
Inc.(CAT).
Meanwhile, the tech-heavy Nasdaq Composite advanced 40 points,
or 0.8%, to 4,891.
A rally in crude-oil futures
(http://www.marketwatch.com/story/crude-prices-higher-after-us-rig-count-adds-to-streak-of-declines-2016-04-11)
boosted the main benchmarks, following a recent trend of strong
correlation between oil and stock prices.
Oil remained the "key market driver" on Monday, as firmer oil
prices were "trumping the prospects of a poor earnings season,
along with the absence of major economic reports today," said Peter
Cardillo, chief market economist at First Standard Financial.
A surge in gold prices boosted the stocks of gold miners, like
Kinross Gold Corp. (KGC)and AngloGold Ashanti Ltd. (AU)(AU)Gold
continued to rise after enjoying its best weekly gain in three
weeks on Friday.
At the same time, stocks were buoyed by a slight recovery in the
dollar , which pared losses against the yen after hitting fresh
lows in Asia
(http://www.marketwatch.com/story/dollar-drops-to-fresh-17-month-low-against-the-yen-2016-04-11).
The yen has recently been at the center of equity selloffs, as yen
strength and dollar weakness have fueled risk aversion given that
the Japanese currency is perceived as a haven in times of global
economic worries.
John Manley chief equity strategist at Wells Fargo Advantage
Funds called the dollar-yen relationship a "market mosquito
bite."
"Sometimes a mosquito bite can really grab your attention. But
in the long run, the dollar-yen will correct--just not in a
straight line," Manley said, adding that the impact on equities and
risk aversion could become bigger in the short term if the Bank of
Japan steps in to weaken its currency by flooding the market with
yen.
Read:Japan can't be gentle with yen intervention
(http://www.marketwatch.com/story/japan-cant-be-gentle-with-yen-intervention-2016-04-08)
Meanwhile, investors waited for Alcoa Inc.'s
results--representing the unofficial start of earnings season.
The recent market correction appears to have come from concerns
that price-to-earnings ratios may have bounced back too quickly,
said Colin Cieszynski, chief market strategist at CMC Markets, in
emailed comments.
"The answer to the question of whether prices are currently too
high or earnings estimates are currently too low could spark
significant moves in the markets over the coming weeks," he
added.
Yellen and Obama: Also in focus was a meeting between Federal
Reserve Chairwoman Janet Yellen and President Barack Obama on the
U.S. economy scheduled for Monday afternoon.
Fed chief Yellen will meet President Obama at 3 p.m. Eastern
Time in the Oval Office of the White House. The two will discuss
(http://www.marketwatch.com/story/obama-yellen-to-meet-monday-to-talk-economy-2016-04-10)
"the state of the American and global economy, Wall Street reform,
and the long-term economic outlook, economic and regulatory
issues," the White House said in a statement.
New York Fed President William Dudley will speak at the
Association for Neighborhood and Housing Development conference in
New York at 9:25 a.m. Eastern. Later, Dallas Fed President Rob
Kaplan will take part in a moderated discussion at Louisiana Tech
University in Ruston at 1 p.m. Eastern.
Read:The U.S. economy -- Goldilocks, it's not
(http://www.marketwatch.com/story/the-us-economy-goldilocks-its-not-2016-04-10)
Stocks to watch: Chesapeake Energy Corp.(CHK) shares surged 12%
after the company reached an amended agreement with its lenders
(http://www.marketwatch.com/story/chesapeake-amends-credit-facility-agreement-with-lenders-2016-04-11-91034841)that
allows it to borrow as much as $2.5 billion and offers relief on
some terms of its debt covenants.
Shares of Yahoo Inc. (YHOO) rose 1.8% after the U.K.'s Daily
Mail emerged as a possible bidder for the Internet group's assets,
The Wall Street Journal reported
(http://www.marketwatch.com/story/daily-mail-exploring-buyout-bid-for-yahoo-2016-04-11).
Telecom giant Verizon Communications Inc. (VZ) is also among a big
group of companies interested in Yahoo, as a deadline of April 18
looms for preliminary offers.
Shares of Hatteras Financial Corp. (HTS) surged 10% after Annaly
Capital Management Inc. (NLY) announced a deal to buy the fellow
real-estate investment trust for about $1.5 billion.
(http://www.marketwatch.com/story/annaly-capital-to-buy-hatteras-financial-for-15-billion-2016-04-11-710317)
Alcoa (AA) will report after the market closes on Monday. Wall
Street analysts expect a third straight quarter of declines in both
earnings and revenue from the aluminum producer. Read more on what
to expect from Alcoa
(http://www.marketwatch.com/story/what-to-expect-from-alcoas-earnings-2016-04-08)
Those results will come amid expectations that S&P 500
companies will deliver the worst earnings quarter since 2009.
"It's hard to argue against overall Street expectations for this
quarter being particularly low, and the interesting reports this
week will more than likely come out from the banks, which are
expected to be a front-runner for negative earnings growth this
period," said Jim Reid, strategist at Deutsche Bank, in a note to
clients on Monday.
Banks
Wall Street investors also will be looking ahead to the
quarterly results for financial firms, including some of the
biggest banks in the U.S., whose shares have badly lagged behind
the broader market amid a hesitancy by the Fed to raise interest
rates off ultralow levels. Lower rates can erode the gap between
what banks make on loans and how much they pay on deposits.
Financial stocks have been the worst performing sector this
year, falling 8% year to date.
On Wednesday, J.P. Morgan Chase & Co. (JPM) will report
earnings. Wells Fargo & Co. (WFC) and Bank of America Corp.
(BAC) will follow on Thursday, and Citigroup Inc. (C) on
Friday.
Other markets:European stocks
(http://www.marketwatch.com/story/european-stocks-get-a-lift-from-italian-shares-2016-04-11)
rose, led by the banking sector, while Asia
(http://www.marketwatch.com/story/china-shares-aided-by-soft-inflation-data-but-strong-yen-hits-nikkei-2016-04-11)
had a mixed day. The Shanghai Composite Index finished 1.6% higher
after soft Chinese inflation data drove hopes that authorities will
act again to stimulate the economy. The Nikkei 225 index closed
down 0.4%, weighed by yen strength.
The yield on the benchmark 10-year Treasury note gained 2.3
basis points to 1.745%, its highest level in nearly a week. Yields
move in the opposite direction of prices.
(END) Dow Jones Newswires
April 11, 2016 10:50 ET (14:50 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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