US stocks rally as investors welcome French presidential vote

US stocks joined a worldwide surge higher on Monday after the first round of France's presidential election raised expectations that the European Union will hold together.

US stocks rally as investors welcome French presidential vote

US stocks joined a worldwide surge higher on Monday after the first round of France's presidential election raised expectations that the European Union will hold together.

A candidate seen as pro-business won the most votes on Sunday, and many investors expect him to win a run-off against the remaining anti-EU candidate on May 7.

Prices for gold, Treasurys and other investments that signal fear in the market all sank, while a popular gauge for measuring investor fear eased by the biggest margin since summer 2011.

"It's good news, and now investors have a reason to focus on the fundamentals in Europe, which are strong," said Luca Paolini, chief strategist at UK-based Pictet Asset Management.

The Standard & Poor's 500 index jumped 25.46 points, or 1.1%, to 2,374.15, the Dow Jones industrial average rose 216.13, or 1.1%, to 20,763.89, and the Nasdaq composite gained 73.30, or 1.2%, to 5,983.82.

Heading into Sunday's election in France, several candidates railed against the European Union, one of the world's dominant trading partners. A victory for one of those candidates would have followed the path set by last year's Brexit vote by the UK to exit the EU and the US election of President Donald Trump as a kick in the face to the globalist, free-trade world view.

Emmanuel Macron, a candidate investors see as pro-business, won the most votes in France and will face Marine Le Pen in a run-off election in two weeks. Ms Le Pen is one of the candidates who campaigned against the EU, but many investors expect Mr Macron to win.

"It's not only France" where the forces of populism seem to be waning, said Mr Paolini. He pointed to the Dutch elections last month where a candidate who ran on a pledge to pull the Netherlands from the EU lost.

"This surge is fading," Mr Paolini said. "Maybe it's too early to celebrate, but that's what the market is pricing in."

France's Cac 40 index jumped 4.1% and at one point touched its highest level since 2008. Germany's DAX gained 3.4%, and the FTSE 100 in London rose 2.1%.

Asian markets also rose. Japan's Nikkei 225 index climbed 1.4%, and Hong Kong's Hang Seng and South Korea's Kospi indexes both added 0.4%.

In the US, the VIX index that many investors see as a measure of the market's fear level plunged 25%, its largest drop since summer 2011 when worries were intense that Europe's debt crisis could lead the union to unravel.

Demand for other investments that investors flock to when they are fearful also fell. The price of gold fell 11.60 dollars to settle at 1,277.50 dollars per ounce.

Prices for Treasury bonds dropped, which sent yields higher. The yield on the 10-year Treasury climbed to 2.27% from 2.25% late on Friday.

Any rise in bond yields recently has fed into immediate gains for bank stocks, because higher rates mean banks can charge more for loans, and Monday fit the pattern again.

Financial stocks in the S&P 500 jumped 2.2%, by far the biggest gain among the 11 sectors that make up the index. Bank of America surged 4.1%, and SunTrust Banks gained 3.6%.

Strong earnings reports also helped to lift stocks, as companies continue to report better results than expected. Analysts forecast this to be the best quarter of earnings growth in years.

Hasbro jumped 5.67 dollars, or 5.9%, to 101.70 dollars after reporting stronger quarterly revenue and profits than analysts had forecast. Illinois Tool Works rose 4.89 dollars, or 3.6%, to 139.76 dollars after also surprising analysts with a better-than-expected quarter.

In the commodities market, benchmark US crude oil fell 39 cents to settle at 49.23 dollars per barrel. Brent crude, which is used to price international oils, fell 36 cents to 51.60 dollars per barrel.

Natural gas fell 3.5 cents to 3.07 dollars per 1,000 cubic feet, heating oil fell a penny to 1.54 dollars per gallon and wholesale petrol dropped 2 cents to 1.62 dollars a gallon.

Silver was virtually flat at 17.86 dollars per ounce and copper added 1.5 cents to 2.55 dollars per pound.

With expectations strengthening that the shared European economy will remain intact, the foreign exchange market saw the value of the euro rise to 1.0858 dollars from 1.0695 dollars late on Friday.

The dollar climbed to 109.79 Japanese yen from 109.21, and the British pound slipped to 1.2789 dollars from 1.2795 dollars.


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