Wall Street jump takes stock index to 14-year peak on fading Ukraine worries
US stocks surged today, with the Nasdaq closing at a 14-year high as increasing homebuilder confidence and hopes for receding tensions in Russia gave investors reasons to make bigger bets on the equity market.
The Nasdaq Composite ended above 4,508, marking the first time since March 31, 2000, that the tech-heavy index closed above 4,500 points. The S&P 500 extended last week's gains, climbing to within 1 percent of an all-time high.
Homebuilders' stocks rose after the NAHB/Wells Fargo Housing Market Index showed that homebuilder sentiment rose for the third straight month in August.
The PHLX housing sector index climbed 1.7 percent, lifted by a rally in major homebuilders, including PulteGroup Inc, up 2.8 percent at $18.78, and D.R. Horton Inc , up 1.4 percent at $21.13.
Ambiguity lingered in Russia, where tensions with Ukraine have recently rattled markets. Russian officials said that while all issues related to the country's humanitarian convoy to Ukraine had been resolved, progress had not been made on reaching a cease-fire.
Yet investors' appetite for stocks seemed little dampened by headlines from abroad. Brent crude oil hit a 14-month low as Kurdish forces made progress against militants in Iraq and the Kiev military reported new successes against pro-Russian separatists in Luhansk.
The Dow Jones Transportation Average climbed 1.7 percent.
Airline stocks soared as oil prices slid. Shares of United Continental Holdings Inc rose 4 percent to $47.84 and shares of Southwest Airlines, the S&P's third-biggest percentage gainer, rose 3.6 percent to $30.82.
The Dow Jones industrial average jumped 175.83 points, or 1.06 percent, to close at 16,838.74. The S&P 500 rose 16.68 points, or 0.85 percent, to 1,971.74. The Nasdaq Composite added 43.39 points, or 0.97 percent, to close at 4,508.31.
European shares also rallied as the market was encouraged by diplomatic efforts at the weekend to try and ease tension in Ukraine.
Russia's Foreign Ministry said on Monday a "certain progress" was achieved during talks between Russia, Germany, France and Ukraine in Berlin on Sunday, although there was no movement towards a ceasefire between government and rebel forces in eastern Ukraine.
The FTSEurofirst 300 index of top European shares closed up 1.2 percent at 1,339.35 points. Germany's DAX rose 1.7 percent.
Equities were also bolstered by mounting investor hopes that the European Central Bank will resort to asset purchases in the coming year, with a Reuters poll of euro money market traders putting expectations of this at 50 percent.
German blue-chips - considered the most vulnerable to the tensions between the West and Russia - were among the top gainers on Monday. Continental AG, BASF and Siemens were up between 1.6 percent and 3.3 percent.
Autos stocks also brushed off the threat of possible retaliatory sanctions from Russia against Western nations, which according to Russian daily newspaper Vedomosti may include a ban on the imports of cars. The STOXX Europe 600 autos index rose 2 percent.
Japan's Nikkei was choppy today as geopolitical tensions checked risk appetite, but Chugai Pharmaceutical jumped on a media report that Roche Holding AG's may be close to sealing a deal to gain full ownership of the Japanese drugmaker.
Chugai Pharmaceutical Co soared 21 percent to a record high as Bloomberg News last Friday reported that Roche is in talks to buy the almost 40 percent stake in the Japanese company that it does not already own for about $10 billion.
Chugai denied the report over the weekend.
The Nikkei was flat at 15,319.23 in a volatile mid-morning session after booking a 3.7 percent gain last week, the biggest weekly rise since mid-April.
The Nikkei has lost almost 3 percent from a six-month high of 15,759.66 posted 2-1/2 weeks ago.
Investors were cautious as the four-month conflict in Ukraine reached a critical phase over the weekend - Kiev and Western governments are nervously watching if Russia will intervene in support of the increasingly besieged rebels in eastern Ukraine.
Shippers outperformed after the Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry bulk commodities, rose on Friday thanks to higher rates for bigger vessels.
Mitsui OSK Lines gained 0.5 percent and Kawasaki Kisen Kaisha soared 2.2 percent.
Exporters were mixed, with Toyota Motor Corp falling 0.4 percent, Panasonic Corp adding 0.3 percent and Honda Motor Co shedding 0.1 percent.
The broader Topix was flat at 1,270.35, and the new JPX-Nikkei Index 400 was also flat at 11,562.40.