U.S. equities continued their post-election rally on Monday, with large-caps pushing to new record highs despite over-the-weekend developments out of Italy that could restart Eurozone debt worries.
In the end, the Dow Jones Industrial Average gained 0.2%, the S&P 500 Index gained 0.6%, the Nasdaq Composite gained 1% and the Russell 2000 gained 1.8%. Treasury bonds strengthened after earlier weakness, the dollar was higher, gold lost 0.1% and crude oil gained 0.2%.
The dollar’s gains against the Japanese yen — the well-known currency carry trade — boosted the ProShares UltraShort Yen (NYSEARCA:YCS) recommended to Edge subscribers to a gain of 14.2% since recommended in mid-November.
Following a failed referendum in Italy on changes to the constitution, Prime Minister Renzi announced his resignation setting up fresh elections that could elevate the eurosceptic, anti-debt Five Star Movement party. There are also concerns the political shakeup could slow needed economic reforms and bank recapitalizations.
Market fallout was limited, however, as the European Central Bank pledged to increase its bond purchases last week to quell any turbulence.
Here at home, focus was given to comments from New York Federal Reserve chairman Bill Dudley favoring further rate hikes ahead of the Dec. 14 policy decision. St. Louis Fed president Bullard said President-elect Trump’s fiscal stimulus plans could be a boost to the economy if they improve currently tepid labor productivity.
Overall, financial stocks led the way with a 1.2% gain, while healthcare and industrials were the laggards with small losses. Nike Inc (NYSE:NKE) gained 2.8% thanks to an analyst upgrade from HSBC citing attractive valuations and rising expectations of long-term growth. Kinross Gold Corporation (USA) (NYSE:KGC) fell 1.7% on a downgrade from Citigroup.
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