U.S. Stocks Rally on Earnings, Softer Trade Stance: Markets Wrap

(Bloomberg) -- U.S. stocks rose for a third day, continuing a torrid rebound from the October sell-off as investors greeted the latest batch of earnings optimistically amid signs of easing trade tension. The dollar sank, and oil tumbled.

The risk-on mood that’s suddenly gripped American equity markets sent the S&P 500 to its best three-day advance in two years. Earnings that for weeks had done little to jolt shares higher contributed to Thursday’s gain, with DowDuPont rallying the most since 2015 and NXP Semiconductors leading a rally in chipmakers. Homebuilders that got trounced in October rallied, while utility stocks that had been in favor slumped.

In after-hours earnings moves, Apple fell 3.4 percent after iPhone sales missed, while Starbucks jumped on its results. Caesars Entertainment rose and U.S. Steel retreated.

Equities also got a lift from a President Donald Trump tweet claiming progress in trade negotiations with China. The dollar extended its sell-off to the most since March after it ended October at the highest in more than a year. The 10-year Treasury yield slipped after data on manufacturing missed estimates ahead of Friday’s jobs report. Emerging-market assets surged. Brazil’s Ibovespa stock index closed at a record high on optimism over the newly elected government.

Investors welcome any reason to be positive after a tumultuous October, the worst month for global shares since May 2012. While risks abound from the likes of European politics and slowing Chinese growth, bulls are hoping some of the momentum garnered at the end of last month from firm U.S. economic data can be sustained. The focus turns to Apple Thursday, then to the monthly U.S. jobs report Friday.

In Europe, the Stoxx 600 Index advanced with telecoms and travel companies leading the way. While strong results from the likes of ING Groep NV helped buoy sentiment, not all the news was positive, with Royal Dutch Shell Plc declining after profit fell short of expectations.

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Here are some key events still to come this week:

• Earnings season includes: Macquarie, Alibaba, Exxon Mobil
• On Friday, the final U.S. jobs report before the November midterm elections may show hiring improved and that the unemployment rate held at a 48-year low.

And these are the main moves in markets:

Stocks

• The S&P 500 Index increased 1 percent as of 4 p.m. New York time, capping a three-day surge of 3.75 percent.
• The Nasdaq 100 rose 1.5 percent, pushing its three-day rally past 5 percent.
• The Dow Jones Industrial Average climbed 1.1 percent and small caps jumped 2.2 percent.
• The Stoxx Europe 600 Index gained 0.4 percent to the highest in more than two weeks.
• The MSCI All-Country World Index climbed 1.1 percent.
• The MSCI Emerging Market Index rose 2 percent.

Currencies

• The Bloomberg Dollar Spot Index sank 0.8 percent, the steepest slide since March.
• The euro jumped 0.9 percent to $1.14, the biggest increase in six weeks.
• The Japanese yen increased 0.2 percent to 112.689 per dollar.
• The MSCI Emerging Markets Currency Index jumped 0.9.
• The offshore yuan gained 0.9 percent to 6.91 per dollar.

Bonds

• The yield on 10-year Treasuries fell one basis point to 3.14 percent.
• The two-year yield fell two basis points to 2.8465 percent
• Germany’s 10-year yield increased one basis point to 0.399 percent.
• Britain’s 10-year yield gained two basis points to 1.455 percent.

Commodities

• The Bloomberg Commodity Index gained 0.5 percent, the biggest climb in more than two weeks.
• West Texas Intermediate crude decreased 2.8 percent to $63.50 a barrel.
• Gold climbed 1.7 percent to $1,235.4 an ounce.

--With assistance from Eddie van der Walt.

To contact the reporter on this story: Jeremy Herron in New York at jherron8@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Jeremy Herron

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