A gauge of stocks across the world rose on Monday, led by a rebound on Wall Street, even as rising COVID-19 cases threaten to stall the recovery of the world's largest economy.
Contracts to buy U.S. previously owned homes rose by the highest percentage on record in May. But they remained below their February level and were down compared with May 2019, which also kept alive expectations for even more economic stimulus.
Analysts at Morgan Stanley said a further injection of cash was critical to the bank's thesis for a V-shaped U.S. economic recovery.
"The market believes that the (Federal Reserve) has its back," said Sam Stovall, chief investment strategist at CFRA Research in New York.
"If things get really bad, the Fed will step in with additional monetary easing and basically reach into their bag of tricks to do whatever they need to support the market."
Confirmed COVID-19 cases worldwide rose past 10 million and deaths surpassed 500,000 on Sunday. The relentless spread of the new coronavirus in the United States, Latin America and elsewhere curbed optimism over the global economy and raised worries that some reopening plans will be delayed.
Boeing shares <BA.N> shot up 14% after 737 MAX certification flights started Monday and the rally gave life to the Dow industrials <.DJI>, while factory- and materials-heavy sectors of the S&P 500 <.SPX> boosted the benchmark index. Indexes closed the day at or near session highs.
The Dow Jones Industrial Average <.DJI> rose 580.25 points, or 2.32%, to 25,595.8, the S&P 500 <.SPX> gained 44.19 points, or 1.47%, to 3,053.24 and the Nasdaq Composite <.IXIC> added 116.93 points, or 1.2%, to 9,874.15.
The pan-European STOXX 600 index <.STOXX> rose 0.44% and MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 0.74%.
Emerging market stocks lost 0.48%. MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> closed 0.93% lower, while Japan's Nikkei futures <NKc1> rose 0.29%.
It is an important week for U.S. data, with the ISM manufacturing index on Wednesday and monthly payrolls on Thursday, moved up a day due to observance of the Independence Day holiday on Friday. Fed Chair Jerome Powell is testifying on Tuesday.
Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis, said he expected small changes for long-term yields, noting that Treasuries may be "one of the least-interesting markets for the rest of the year" due to the Fed's influence on the short end of the curve.
The yield on benchmark 10-year notes <US10YT=RR> was barely changed from late Friday at 0.6381%. The long end of curve edged higher as investors hoped for a stimulus-backed economic rebound. The 30-year bond <US30YT=RR> last fell 12/32 in price to yield 1.3877%, from 1.372%.
In currency markets, sterling fell against both the dollar and euro as investors focused on how Britain's government will pay for its planned infrastructure push, while Brexit-related risks kept pressure on the pound.
Sterling <GBP=> was last trading at $1.2292, down 0.33% on the day after falling nearly 0.7% earlier.
The dollar index <=USD> rose 0.011%, with the euro <EUR=> up 0.17% to $1.1236.
The Japanese yen weakened 0.35% versus the greenback at 107.55 per dollar.
U.S. crude <CLc1> recently rose 2.73% to $39.54 per barrel and Brent <LCOc1> was at $41.55, up 1.29% on the day.
(Reporting by Rodrigo Campos; Additional reporting by Joice Alves and Thyagaraju Adinarayan in London, Uday Sampath Kumar and Devik Jain in Bengaluru, Stephanie Kelly in New York and Karen Pierog in Chicago; Editing by Dan Grebler and Cynthia Osterman)
