NEW YORK (Reuters) - U.S. stocks rallied on Monday, tracking a relief rally that swept through Asian and European markets, after centrist candidate and market favorite Emmanuel Macron won the first round of the French presidential election.
Pro-EU Macron is expected to beat right-wing rival Marine Le Pen in a deciding vote on May 7 according to polls, which were mostly right about the first-round results.
“This alleviates fears that we were going to have to navigate a French exit (from) the European Union,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
“This is a classic relief rally showing up most in financials,” he said. “We cleared this hurdle and now it’s a little bit more clear running.”
The moves across markets point to an unwinding of bets taken in the past few days when traders had turned defensive ahead of the French election.
The Dow Jones Industrial Average .DJI rose 216.13 points, or 1.05 percent, to 20,763.89, the S&P 500 .SPX gained 25.46 points, or 1.08 percent, to 2,374.15 and the Nasdaq Composite .IXIC added 73.30 points, or 1.24 percent, to 5,983.82.
MSCI's gauge of stocks across the globe .MIWD00000PUS gained 1.56 percent to 453.5 after touching a record high of 453.7.
U.S. investors are also gearing up for the busiest earnings week in at least a decade, with over 190 S&P 500 members, including heavyweights Alphabet GOOGL.O and Microsoft MSFT.O, due to report results this week.
“Earnings are coming in better than expected and this is for a quarter where estimates were pretty tight. We didn’t see much pullback with estimates in the course of the quarter, so expectations were high and we’re beating them,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.
Of the 100 S&P 500 companies that have reported results so far, 77 percent have beaten profit expectations, according to Thomson Reuters I/B/E/S. This has helped lift the blended profit growth estimates to 11 percent from 10 percent at the start of the earnings season.
Defensive trades suffered as traders embraced risk. Spot gold XAU= dropped 0.6 percent to $1,276.10 an ounce. The safe-haven Japanese yen weakened 0.58 percent versus the greenback at 109.73 per dollar. The CBOE Volatility index .VIX ended at 10.84, its lowest since Feb. 14.
Advancing issues outnumbered declining ones on the NYSE by a 2.47-to-1 ratio; on Nasdaq, a 2.61-to-1 ratio favored advancers.
The S&P 500 posted 72 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 191 new highs and 43 new lows.
About 6.8 billion shares changed hands in U.S. exchanges, above the 6.3 billion daily average over the last 20 sessions.
Additional reporting by Yashaswini Swamynathan in Bengaluru and Chuck Mikolajczak in New York; Editing by Nick Zieminski
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