U.S. stocks hit record highs on easing central bank outlook, oil rise

NEW YORK (Reuters) - Wall Street stocks closed at record highs on Monday, boosted by expectations for continued monetary policy easing around the globe and a jump in oil prices to nearly five-week highs on speculation top producers may be open to cutting output.

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., August 9, 2016. REUTERS/Lucas Jackson

The U.S. S&P 500, Dow and Nasdaq stock indexes all closed at all-time highs.

A strong monthly jobs report on Aug. 5 boosted optimism about the U.S. economy, driving all three major indexes to close at record levels last Thursday for the first time since 1999.

The S&P 500 index .SPX has notched 13 record intraday highs since July, including Monday's.

“Our sense is that we’re still in this Goldilocks period where it’s a sweet spot for equities and that will not change probably until the next rate hike,” said Mike Bailey, director of research at FBB Capital Partners.

The Dow Jones industrial average .DJI rose 59.58 points, or 0.32 percent, to 18,636.05, the S&P 500 .SPX gained 6.1 points, or 0.28 percent, to 2,190.15 and the Nasdaq Composite .IXIC added 29.12 points, or 0.56 percent, to 5,262.02.

The Federal Reserve will release on Wednesday minutes of its July meeting that could provide clues to the U.S. central bank’s plans on interest rates and its view on the health of the economy.

The expected easing posture of central banks globally suggested to investors that the Fed may be slower to raise the nation’s short-term rates and that could be reflected in the minutes, analysts said.

“There’s growing realization that the events in foreign economies have far more impact on U.S. rates than previously accepted,” said Michael Matousek, head trader at U.S. Global Investors Inc in San Antonio, citing a research note. “People are thinking overseas troubles are going to keep rates lower and that’s been keeping an underlying bid to the (stock) market.”

The jump in U.S. equities helped underpin markets in London .FTSE and Frankfurt .GDAXI, which added to gains and were up 0.36 percent and 0.24 percent respectively. The pan-European FTSE 300 .FTEU3 edged up 0.02 percent.

Chinese equity markets had strong gains as the blue-chip CSI300 Index .CSI300 jumped 3 percent to a seven-month high amid speculation more stimulus would be forthcoming from Beijing after weaker-than-expected July data.

A subdued second-quarter economic reading in Japan left the Nikkei .N225 down 0.3 percent and suggested the Bank of Japan could again ease monetary policy soon.

MSCI's all-world equity index .MIWD00000PUS rose 0.2 percent.

The expectation for continued loose monetary policy and appetite for stocks pushed U.S. Treasury prices down, with benchmark yields rising from near two-week lows. Analysts said that hedging linked to this week’s corporate bond supply also spurred selling in Treasuries.

The benchmark 10-year Treasury US10YT=RR note fell 12/32 in price to yield 1.56 percent.

Yields on British 10-year gilts GB10YT=RR touched record lows on Monday, falling to 0.503 percent. They have more than halved since Britain's surprise vote in June to exit the European Union, having been up at 1.39 percent just before it.

Reduced expectations for Fed policy moves also hurt the U.S. dollar, which has fallen against a basket of currencies in four of the last five trading sessions.

The dollar index .DXY, which tracks the greenback against six major world rivals, fell 0.1 percent to 95.624.

“As it stands now, market participants see a less than fifty-fifty chance of rates rising by December. The dollar will continue to struggle until that chance rises meaningfully,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Brent crude futures LCOc1 rose $1.45 to $48.42 a barrel, its highest since July 12, while U.S. crude CLc1 rose to $45.81.

Reporting by Dion Rabouin; Editing by Dan Grebler and James Dalgleish