Shares of US banks and industrial conglomerates rallied and the dollar strengthened after progress on the Republican tax-overhaul plan spurred bets on higher corporate earnings, while technology shares slumped.
Gains in the Dow Jones Industrial Average and S&P 500 were led by companies that stand to be big winners from the tax overhaul. An index of the biggest tech shares slumped to a five-week low as investors switched out of the sector that had propelled gains earlier this year, sending the Nasdaq Composite Index lower. The yield on benchmark US debt climbed back toward 2.4 percent after the Senate’s passage of corporate tax-cut legislation drew focus away from the investigation into connections between President Donald Trump’s aides and Russia. The pound erased gains after Brexit talks ended without a deal.
US equities also got a lift from mergers-and-acquisitions activity. Walt Disney Co. renewed discussions over acquiring a significant part of 21st Century Fox Inc.’s media assets, according to a person familiar with the talks. CVS Health Corp. will buy Aetna Inc. for about $67.5 billion, creating a health-care giant that unites insurance and the corner drugstore.
The recovery in markets will be welcomed by many investors after the evolving investigation into
potential connections between Trump’s campaign and Russian meddling in the 2016 US election rocked markets. With global equities still hovering near all-time highs, traders may be seizing on the potential of tax cuts boosting growth in the world’s largest economy as reason enough to sustain the bull market.
As the dollar gained, the euro slipped versus most major peers. Traditional safe-haven assets fell, with gold resuming its downward path and the yen slumping. West Texas oil fell below $58 a barrel.
The Stoxx Europe 600 rose the most in five weeks. The MSCI Asia Pacific Index slipped following a drop for Japan’s Topix and a jump for South Korea’s Kospi.
The European Commission College of Commissioners will discuss Brexit on Wednesday and will likely make its recommendation on whether sufficient progress has been made to move negotiations onto the future relationship.
The S&P 500 rose 0.5 percent as of 11:22 am in New York. The Stoxx Europe 600 Index climbed 0.9 percent. Japan’s Nikkei 225 Stock Average dipped 0.5 percent. The MSCI Emerging Market Index gained 0.7 percent. The UK’s FTSE 100 Index increased 0.6 percent.
The Bloomberg Dollar Spot Index rose 0.3 percent. The euro decreased 0.4 percent to $1.1849. The British pound slipped 0.1 percent to $1.3468. The Japanese yen sank 0.6 percent to 112.81 per dollar.
The yield on 10-year Treasuries rose three basis points to 2.39 percent. Germany’s 10-year yield climbed four basis points to 0.34 percent. Britain’s 10-year yield increased six basis points to 1.29 percent. West Texas Intermediate crude decreased 1.2 percent to $57.65 a barrel.