© Reuters. FILE PHOTO: A man looks at an electrical board displaying the Nikkei index outside a brokerage in a commercial district in Tokyo, Japan, on June 21, 2021. REUTERS / Kim Kyung-Hoon
By Lawrence Delevingne
BOSTON (Reuters) – US stocks rose on Monday on optimism about government infrastructure spending and corporate earnings, even as oil prices plunged on broader macroeconomic fear and the spread of the delta variant of the coronavirus continued. .
U.S. senators on Sunday unveiled a bipartisan plan to invest about $ 1 trillion in roads, bridges, ports, high-speed internet and other infrastructure, with some predicting the spending bill, the largest in decades, it could be approved this week.
A spike in corporate earnings and the recent drop in bond yields are also bolstering the case for equity ownership, even as markets are near record highs and economic growth is expected to slow.
Those factors helped push Monday morning to a near all-time high, although the benchmark basket fell slightly to gain 6.44 points, or 0.15%, to 4,401.7 in the early afternoon.
The added 39.77 points, or 0.11%, to 34,975.24, and the added 51.59 points, or 0.35%, to 14,724.27.
The MSCI World Stock Index, which tracks stocks in 49 countries, gained 0.47%.
“Last week’s constructive news on Delta and growth reduces downside risks,” JPMorgan (NYSE 🙂 market strategists wrote in a note Monday.
The bank’s outlook cited a surprise drop in British and European COVID-19 cases and recent data supporting the view that “growth spiked in the US for another quarter and recovered strongly in Europe.”
At the same time, oil prices fell 4% on Monday as weak economic data from China and the United States, the world’s top oil consumers, and higher crude production from OPEC producers fueled fears. weak oil demand and excess supply.
It recently fell 4.33% to $ 70.75 a barrel and stood at $ 72.50, down 3.86% on the day.
US manufacturing continued to grow in July, although the pace slowed for the second month in a row as spending shifts back to goods services and raw material shortages persist.
Factories around the world are experiencing supply bottlenecks, which sent prices skyrocketing in July, while a new wave of coronavirus infections in Asia demonstrated the fragile nature of the global recovery.
Benchmark 10-year Treasuries last rose 25/32 in price to yield 1.1574%, from 1.239% late on Friday, continuing a multi-month decline.
However, negatively interpreting lower Treasury yields could be a mistake, according to Morgan stanley (NYSE 🙂 strategist Guneet Dhingra.
“Investors are adjusting a narrative of excessive pessimism to lower returns,” Dhingra wrote in a note Sunday, noting the low hospitalizations in Britain for the Delta variant, “suggesting exaggerated downside risks from COVID-19. “.
The dollar fell back toward the month-long lows reached last week when it became clear that the Fed was in no rush to tighten policy.
At noon on Monday, the dollar fell 0.049%, while the euro fell 0.02% to $ 1.1868.
Gold prices rose only modestly on Monday, as a spike in risk appetite took some of the shine off the safe-haven metal.
added 0.1% to $ 1,815.69 an ounce. The United States gained 0.12% to $ 1,814.80 an ounce.