Dow surges as FBI sets stage for pre-Election Day rally

Dow surges as FBI sets stage for pre-Election Day rally
November 07 16:01 2016 Print This Article

U.S. stocks jumped Monday, putting equities on track to snap a historic streak of daily losses, after the Federal Bureau of Investigation said its fresh review of Hillary Clinton’s emails wouldn’t lead to charges, triggering a global relief rally as political worries eased.

The day’s gains were broad, with all of the S&P 500’s primary sector advancing on the day and major indexes up more than 1%. The gain followed a nine-day streak of losses for the S&P 500, the longest such losing streak since 1980, which was in large part triggered by polls showing a closer contest between Clinton, the Democratic nominee, and Republican Donald Trump.

The Dow Jones Industrial Average DJIA, +1.62%  soared 253 points, or 1.4%, to 18,142. The S&P 500 index SPX, +1.82%  catapulted 32 points, or 1.6%, higher to 2,117. The Nasdaq Composite Index COMP, +2.09%  climbed 89 points, or 1.8%, to 5,135.

Monday marked the largest one-day gain for the S&P 500 since June.

FBI Director James Comey said Sunday he had informed Congress there were no new findings in the additional emails discovered on the computer of former Rep. Anthony Weiner, whose estranged wife is Clinton aide Huma Abedin. News that the FBI had discovered fresh emails just over a week ago jolted the presidential election race, taking a toll on the Democratic nominee Clinton’s lead in polls over rival Donald Trump.

FBI Director James Comey announced Sunday that the bureau stands behind its prior decision not to recommend charges against Democratic presidential nominee Hillary Clinton.

“The rally is all about Clinton having a better chance of winning, though I don’t think the market is celebrating her policies so much as reflecting how markets, like many Americans, are fearful of the unknown that comes with Trump,” said James Meyer, chief investment officer at Tower Bridge Advisors.

Financial markets in general view a Clinton win as the better outcome in Tuesday’s election, as it presents fewer unknowns and possibly more stability for markets than victory for her rival.

While the day’s gains were broad, financials were the biggest gainers of the day. The S&P financial index popped 2%, boosted by a 2.5% rise in shares of Goldman Sachs Group Inc. GS, +2.26% J.P. Morgan Chase & Co. JPM, +2.30%  climbed 2.4% to $69.34.

Despite the gain on the day, the election should remain an overhang of uncertainty until a winner is decided. Investors are also paying close attention to what party will control the Congress and Senate.

“How markets will perform from today’s open through tomorrow’s close is anybody’s bet,” said Meyer. “To the extent Clinton’s probability of winning changes, the market will change with it.”

The appetite for riskier assets triggered a global equity rally, with European stocks up more than 1%. In Asia, the Nikkei 225 index NIK, +1.61% soared 1.6% as the Japanese yen USDJPY, +1.35%  fell against the dollar. The yen and gold are seen as assets that investors turn to in times of economic and political uncertainty.

Read: Election-inspired stock market volatility is overblown

Gold GCZ6, -1.68%  was down 1.4%, after gaining 2.2% last week on a boost in the polls for Trump. Oil CLZ6, +0.34%  rose 1.6% on the day.

The dollar saw big gains, with the ICE Dollar Index DXY, +0.45% which measures the greenback against a half-dozen rivals, up 0.6% on the day.

The Mexican peso USDMXN, -2.2111% traded at $18.57 to the dollar, versus $19.02 earlier in Asia ahead of the FBI headlines. Many believe a Trump victory would harm the Mexican economy as the candidate has repeatedly promised to raise trade barriers and build a wall on the U.S.-Mexican border.

A reading on consumer credit is the only data due for release on Monday, expected at 3 p.m. Eastern Time.

Stocks to Watch: Shares of Warren Buffett’s Berkshire Hathaway Inc.BRK.A, +1.90% BRK.B, +1.97% rose 1.3% after the multinational conglomerate posted results late Friday.

Shares of LendingClub Corp. LC, +17.45%  jumped 16.5% after results of the online credit marketplace beat forecasts.

Auction house Sotheby’s BID, +7.12%  posted a wider-than-expected loss, but revenue beat forecasts, sending shares up 4.9%.

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Mark Winterberg
Mark Winterberg

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