Wall Street Stages Sharp Rally as Weaker Irma Shores Up Investor Optimism

Lloyd Doyle
September 13, 2017

"It does appear that the worst-case scenario for Florida has been evaded", said Peter Cardillo, chief market economist at First Standard Financial in NY. Insurance companies jumped, especially smaller ones that do a lot of business in Florida.

LAGGARDS: Home improvement retailers fell.

The standoff between the USA and North Korea and worries about the damage from hurricanes Harvey and Irma had weighed on the market in the last month. In the USA, bond prices fell, sending yields higher.

Investors are so focused on the hurricane and the Federal Reserve's potential monetary tightening that they are missing the enormous boost the weaker dollar and low interest rates will give the US economy, said Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis.

ANALYST TAKE: "Once again we find ourselves in a scenario in which no news is good news and while underlying risks remain, the longer we go without another nuclear or missile test, the more positive investors will become", said Craig Erlam, senior market analyst at OANDA.

And while a gridlocked federal government hasn't done much to stimulate the economy, Paulsen said the weakening dollar and falling interest rates could give USA businesses, especially technology companies, a big boost. The FTSE 100 index of leading British shares was down however, trading 0.2 percent lower at 7,396, with British stocks suffering from a big rise in the value of the pound. The Nasdaq composite jumped 72 points, or 1.1 percent, to 6,432 and was also close to a record. The Russell 2000 index of smaller-company stocks added 15.40 points, or 1.1 percent, to 1,414.83.

Demand slipped for safe-haven assets as investors took on more risk after Irma caused less damage than initially expected and North Korea marked its founding on Saturday without new provocations.

Irma weakened shortly before it came ashore Sunday. While heavy flooding swamped many cities, including Miami, and millions were left without power, the state's largest city was spared the brunt of the storm. While the damage is still being assessed, insurers climbed Monday as investors anticipate they won't have to pay out as much in claims as it looked like they would just a few days ago.

HCI Group jumped $5, or 16.3 percent, to $35.78 while Heritage Insurance gained $2.22, or 23.7 percent, to $11.59. XL Group advanced $1.92, or 5 percent, to $40.53 and Travelers gained $3.25, or 2.7 percent, to $123.01. Travel companies and insurers are also rising and home-improvement companies like Lowe's and Home Depot, which rallied last week, fell. Royal Caribbean Cruises jumped $4.02, or 3.4 percent, to $121.47 and American Airlines gained $1.55, or 3.4 percent, to $45.15.

The pan-European FTSEurofirst 300 index added 1.05 percent to close at 1,491.19 and MSCI's gauge of global stocks gained 0.87 percent.

Investors' sense of relief also pushed orange juice futures a little lower.

- Britain's 10-year yield increased five basis points to 1.04 percent. Banks rose, as JPMorgan Chase gained $1.37, or 1.5 percent, to $89.79 and Fifth Third Bancorp added 60 cents, or 2.4 percent, to $25.70. The pound was up 0.8 percent at $1.3268 in London trading. Silver fell 22 cents, or 1.2 percent, to $17.90 an ounce. Apple, which will unveil its newest iPhone on Tuesday, rose $2.92, or 1.8 percent, to $161.55 and Facebook rose $2.33, or 1.4 percent, to $173.28. Microsoft added 66 cents to $74.65 and Mastercard rose $4.36, or 3.2 percent, to $141.58.

Other reports by Iphone Fresh

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