U.S. Stocks Rise After Volatile Week

By Akane Otani and Justin Yang Features Dow Jones Newswires

U.S. stocks rise, led by gains in financial stocks

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-- Havens like gold, U.S. Treasurys retreat

-- Volatility index pulls back

U.S. stocks jumped Monday after a volatile week of trading sent major indexes to their steepest declines in months.

The Dow Jones Industrial Average added 136 points, or 0.6%, to 21994. The S&P 500 climbed 1%, on track for its biggest one-day gain since April, and the Nasdaq Composite rose 1.1%.

Rising tensions between North Korea and the U.S. and a string of disappointing earnings reports punctured a streak of listless trading for U.S. stocks last week while sending assets such as government bonds and the yen higher.

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Much of the moves reversed course Monday, however, something some traders attributed to solid corporate earnings, stronger-than-expected economic data from Japan, and investors repricing the risks of escalating conflict between North Korea and the U.S.

U.S. Secretary of Defense Jim Mattis and Secretary of State Rex Tillerson said Sunday that the Trump administration was still trying to achieve the "irreversible denuclearization" of North Korea through diplomacy.

"The move up [in markets] today is being driven by the fact there's been a little bit of a sigh of relief that you haven't seen further escalation," said Supriya Menon, senior multiasset strategist at Pictet Asset Management.

Financial stocks rose with bond yields Monday, leading gains in the S&P 500. Banks tend to benefit from higher yields since they boost their net-interest margins, a key measure of lending profitability.

The S&P 500 financial sector added 1.3%, with Morgan Stanley and Goldman Sachs Group adding 2% apiece, while the yield on the 10-year U.S. Treasury note rose to 2.211%, according to Tradeweb, from 2.191% Friday. Yields rise as bond prices fall.

Other assets that investors consider to be havens reverted course.

Gold, which investors tend to buy during market uncertainty, fell 0.4% to $1,228.80 a troy ounce, while the yen lost 0.3% against the U.S. dollar.

Another sign of the relative calm in the markets: A measure of expected stock volatility that had spiked last week retreated Monday. The CBOE Volatility Index, which tracks investors' expectations of swings in the S&P 500, slumped 19%.

To some analysts, the market moves Monday appeared to reflect the tendency of investors to buy stocks following any pullbacks. That mentality has helped limit both the scale and duration of stock pullbacks this year, keeping major indexes near their all-time highs.

"After the damage to the markets last week, you've got investors who will come back in," said Art Hogan, chief market strategist at Wunderlich Securities.

Elsewhere, the Stoxx Europe 600 was up 0.9%, led by gains in shares of banks, real-estate companies and technology firms.

Hong Kong's Hang Seng Index rose 1.4% after registering its biggest one-week decline since December. In China, the Shanghai Composite was up 0.9%, snapping a three-trading-day losing streak.

Earnings have been beating "more optimistic" forecasts in Asia, where roughly half of companies, excluding those in Japan, have already posted results, said Stephen Corry, chief investment strategist at LGT in Hong Kong.

--Kenan Machado contributed to this article.

Write to Akane Otani at akane.otani@wsj.com

-- U.S. stocks rise, led by gains in financial stocks

-- Havens like gold, U.S. Treasurys retreat

-- Volatility index pulls back

The S&P 500 posted its biggest one-day gain since April, the latest sign of resilience in a stock market that has climbed to repeated highs this year.

A solid quarter of corporate earnings around the world, stronger-than-expected economic growth in Japan and lessened fears of conflict between North Korea and the U.S. helped stocks rise Monday, some traders and investors said.

The day's moves also reflected investors' tendency this year to buy stocks following pullbacks, some analysts said. That has helped limit both the scale and duration of selloffs in recent months, keeping major indexes near their all-time highs.

Concerns over North Korea's nuclear program and a string of disappointing corporate reports last week sent the S&P 500 and Dow Jones Industrial Average to their steepest weekly declines since March.

"There's been a little bit of a sigh of relief that you haven't seen further escalation," said Supriya Menon, senior multiasset strategist at Pictet Asset Management.

The Dow Jones Industrial Average added 135.39 points, or 0.6%, to 21993.71 on Monday. The blue-chip index has gone 61 sessions without posting a move of 1% or more, its longest such streak since 1995.

The S&P 500 climbed 24.52 points, or 1%, to 2465.84, its biggest gain since April 24, and the Nasdaq Composite rose 83.68 points, or 1.3%, to 6340.23.

Stocks rallied broadly, with technology companies and banks posting some of the biggest gains.

Assets that investors consider to be safer stores of value, including U.S. government bonds and gold, pulled back.

Another sign of the relative calm in the markets: A measure of expected stock volatility that had spiked last week retreated Monday. The CBOE Volatility Index, which tracks investors' expectations of swings in the S&P 500 over the next 30 days, slumped 21%.

Earlier, data showed Japan's economy grew faster than analysts expected in the April-June period. The report was the latest to show economic growth around the world on solid footing, something that investors say has helped power the U.S. stock rally this year.

Write to Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

August 14, 2017 16:51 ET (20:51 GMT)