Global markets rallied after results from the French presidential elections rekindled investors' appetite for risk.
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Investors bought stocks and sold assets perceived as relatively safe such as gold and government bonds. The CBOE Volatility Index, or VIX, a measure of anticipated stock-market volatility sometimes called the "fear gauge," dropped 24%.
The moves put the Dow Jones Industrial Average on pace for its best day since March 1. France's CAC-40 posted its largest one-day jump in nearly seven years, and Germany's benchmark DAX index reached a fresh high.
"The market is enjoying a risk-on trade," said Quincy Krosby, a market strategist for Prudential Financial.
The Dow industrials rose 234 points, or 1.1%, to 20782 in recent trading. The S&P 500 jumped 1.2%, while the Nasdaq Composite climbed 1.3%, putting the index on track for a record.
French independent centrist Emmanuel Macron will face off in the election's second round against National Front leader Marine Le Pen, who has campaigned to take France out of the euro. Opinion polls on Sunday suggested Mr. Macron would win a head-to-head contest.
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"It gives a lot of confidence to the market that we have a good feel for the outlook in France and to a large extent puts to bed the Frexit prospect," said Christopher Dyer, director of global equity at Eaton Vance, noting the outcome should increase appetite for borrowing and investment in Europe.
"European banks should be prime beneficiaries of policies that are pro-growth, pro-stimulus and not protectionist in nature," he said.
Bank shares rallied around the world. Banks in the Stoxx Europe 600 rose 4.8% and the KBW Nasdaw Bank Index of large U.S. commercial lenders climbed 2.6%.
J.P. Morgan Chase & Co. increased 3.8%, and Goldman Sachs added 3.2%, boosting the Dow industrials.
Government bonds sold off in the U.S., Germany, the U.K. and Japan. The yield on the 10-year U.S. Treasury rose to 2.275% from 2.234% on Friday. Yields rise as bond prices fall.
Gold for April delivery fell 0.9% to $1,275.80 an ounce, its largest one-day decline since early March.
The euro was last up 1.3% at $1.0860 after touching a five-month high on Sunday.
The French results came ahead of a busy week of earnings, with companies such as Caterpillar, McDonald's, Microsoft, Amazon.com and Exxon Mobil set to report their quarterly results.
A strong series of reports could give the U.S. stock market the jolt it needs to break out of its recent trading range, said Philip Blancato, president and chief executive of Ladenburg Thalmann Asset Management.
"For it to go substantially higher, you need a good earnings season," he said.
But risk sentiment is expected to be tempered somewhat by the prospect of a looming deadline to avoid a U.S. government shutdown and an uncertain policy mix, analysts said.
President Donald Trump has ordered White House aides to speed up work on drafting a tax plan, prioritizing tax cuts over attempts to avoid increasing the deficit and slashing the corporate rate to 15%, The Wall Street Journal reported Monday
Earlier, stocks in Asia mostly moved higher following the French election result despite a drop in Shanghai-listed stocks. Japan's Nikkei 225 index rose 1.4%, while Hong Kong's Hang Seng Index added 0.4%.
The Shanghai Composite Index fell 1.4% in its worst day this year.
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(END) Dow Jones Newswires
April 24, 2017 15:40 ET (19:40 GMT)