S&P sets record closing high as storm, N. Korea fear fades

Markets Reuters

Traders Timothy Nick, left, Peter Tuchman, center, and Gordon Charlop work on the floor of the New York Stock Exchange. (Copyright 2017 The Associated Press. All rights reserved.)

The S&P 500 surged over 1 percent to a record high close on Monday as tropical storm Irma caused less damage than expected in Florida, and after North Korea did not test-fire missiles over the weekend, which some had feared.

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All 11 major S&P 500 sectors rose, led by financial stocks, with insurers advancing as Irma, once ranked as one of the most powerful hurricane recorded in the Atlantic, lost power.

Irma caused severe flooding in many Florida cities and left more than 6 million homes and businesses without power, but damage appeared to be less than expected. That relieved investors, especially in the wake of Hurricane Harvey, whose devastation is estimated to dent third-quarter economic growth.

Geopolitical tensions eased after North Korea did not mark its founding day on Saturday with another launch of a long-range missile, which the United States and its allies had been bracing for.

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"It is a risk back on situation, people are going back into the market," said Neil Massa, senior equity trader at Manulife Asset Management in Boston. "For now, it is a relief rally for things on both ends - geopolitical and weather wise."

The Dow Jones Industrial Average <.DJI> rose 1.19 percent to end at 22,057.37 points in its largest one-day gain since February.

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The S&P 500 <.SPX> gained 1.08 percent to 2,488.11 and the Nasdaq Composite <.IXIC> added 1.13 percent to 6,432.26.

The CBOE volatility index <.VIX>, a widely-followed measure of market anxiety, fell 1.36 points to 10.76.

The S&P 500 financial index <.SPSY> jumped 1.74 percent, with JPMorgan <JPM.N> up 2.18 percent and insurer Travelers <TRV.N> up 2.34 percent.

With investors less worried about Irma's impact, insurers Universal Insurance Holdings <UVE.N> and HCI Group <HCI.N> surged more than 12 percent, while Heritage Insurance <HRTG.N> soared 21 percent.

So far in 2017, the S&P 500 has risen 10 percent. It is trading near 17.6 times expected earnings, compared to its 10-year average of 14.3, according to Thomson Reuters Datastream.

"Valuations don't bother me terribly," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York. "I don't think we're at a level where valuations themselves are going to cause a correction."

Apple <AAPL.O> rose 1.81 percent a day ahead of the expected launch of a new iPhone, providing the biggest boost to the Nasdaq and S&P 500.

Tesla <TSLA.O> jumped 5.91 percent on news that China was studying when to ban the production and sale of cars using traditional fuels.

Teva <TEVA.N> jumped 19 percent after the generic drugmaker named a new chief executive.

Advancing issues outnumbered declining ones on the NYSE by a 3.73-to-1 ratio; on Nasdaq, a 2.56-to-1 ratio favored advancers.

About 6 billion shares changed hands in U.S. exchanges, above the 5.8 billion daily average over the last 20 sessions.

 

(Additional reporting by Sruthi Shankar in Bengaluru; Editing by Nick Zieminski)

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