(Bloomberg) -- U.S. stocks headed for their first gain in eight sessions as investors assessed prospects for central-bank intervention to mitigate the economic impact from the spreading coronavirus.
The S&P 500 advanced Monday after suffering the worst week for the benchmark since 2008. Tech shares led gains as central banks from Japan to England joined the Federal Reserve in promising action as warranted. Adding to hopes, Group of Seven finance ministers plan to hold a teleconference Tuesday to discuss how to respond to the outbreak.
The gains in U.S. stocks were concentrated in defensive industries like utilities and real-estate firms that investors covet for their dividend yields when bond rates sink. Financials edged higher, while industrials and energy producers slipped. The Cboe Volatility Index edged lower to 37.
The two-year Treasury yield sank through its 2016 lows and 10-year rates fell below 1.10%. Oil rallied on expectations that the OPEC+ alliance will deepen output cuts.
“The underlying effectiveness of central bank action, however high the underlying effectiveness is of their action, it will lift sentiment in the near-term,” said Paul Markham, global equity portfolio manager at Newton Investment Management, which has about $66 billion in assets under management. “We may well see some kind of bounce today but how far it runs and how sustainable it is will largely depend on news flow around the virus.”
Equities got a boost from a rare statement on Friday from the Federal Reserve, which opened the door to a rate cut based on the “evolving risks” posed by the outbreak. Central banks in Japan and the U.K. followed suit with supportive messages. But investors are weighing the comments against increasing pessimism from economists on global growth, with fears mounting that the virus will trigger more losses.
The global death toll from the virus has surpassed 3,000. U.S. cases climbed over the weekend, with the first infections appearing in New York City, Brussels and Berlin, while cases jumped in hot spots of Italy, Iran and South Korea. Positive tests in Italy jumped by more than 500 to 1,694 on Sunday with 41 deaths. Lombardy, the region that includes the financial capital of Milan, accounted for almost 1,000 cases.
Here are some key events coming up:
Trump is set to meet with pharmaceutical industry executives at 3 p.m. Washington time Monday.The Reserve Bank of Australia sets policy on Tuesday.U.S. citizens in states including California and Texas will vote on “Super Tuesday” for a Democratic candidate to run against President Donald Trump in November’s election.The Bank of Canada has a rate decision on Wednesday.OPEC ministers gather in Vienna on March 5-6.
These are the main moves in markets:
Stocks
The S&P 500 Index rose 1.2% as of 11:02 a.m. New York time.The Nasdaq 100 Index advanced 0.7%.The Stoxx Europe 600 Index decreased 0.5%.The MSCI Asia Pacific Index climbed 0.8%.
Currencies
The Bloomberg Dollar Spot Index fell 0.3%.The euro increased 0.9% to $1.1126.The British pound slid 0.4% to $1.277.The Japanese yen strengthened 0.3% to 107.59 per dollar.
Bonds
The yield on 10-year Treasuries decreased eight basis points to 1.07%.The yield on two-year Treasuries dipped 12 basis points to 0.78%.Germany’s 10-year yield fell two basis points to -0.64%.
Commodities
West Texas Intermediate crude jumped 2.6% to $45.96 a barrel.Gold rose 0.5% to $1593.21 an ounce.
--With assistance from Todd White.
To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net
To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Sam Potter
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2020-03-02 15:50:00Z
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