Stock market ends 3-session slide as bank shares rally

U.S. stocks bounced back on Monday to close near session highs, halting three straight sessions of declines for major benchmarks, as banks enjoyed their best daily rally in six weeks.

The Dow Jones Industrial Average

DJIA, +0.90%

 rose 183.67 points, or 0.9%, to close at 20,636.92, led by gains in shares of Boeing Co.

BA, +1.94%

J.P. Morgan Chase Co.

JPM, +1.73%

and Nike Inc.

NKE, +1.63%

 

The SP 500

SPX, +0.86%

 advanced 20.06 points, or 0.9%, to finish at 2,349.01, as all 11 sectors traded higher, led by gains in financial, real estate and industrial stocks. A popular way to bet on bank moves, the Financial Select Sector SPDR ETF

XLF, +1.75%

which tracks the SP 500’s financials, rose 1.8% to post its best daily rise sine March 1, according to FactSet data.

The Nasdaq Composite Index

COMP, +0.89%

 gained 51.64 points, or 0.9%, to close at 5,856.79, with shares of Nvidia Corp.

NVDA, +3.92%

 closing up nearly 4%, and Amazon.com Inc.

AMZN, +1.96%

 shares rising 2%.

Monday’s climb comes as corporate earnings get under way and as geopolitical tensions, notably those between the U.S. and North Korea, have heightened worries about aggressions escalating into a nuclear confrontation.

Over the weekend, North Korea put on a massive military parade, followed by a failed missile launch. In an unannounced visit to the Korean Peninsula’s demilitarized zone, U.S. Vice President Mike Pence on Monday warned North Korea “not to test” the resolve of President Donald Trump or the military strength of the U.S.

Equities have been struggling for direction, with investors looking for confirmation that higher valuations—repeat record highs for major indexes sparked by President Donald Trump’s election—will be justified by economic activity. Early reads from big banks so far have been encouraging, but markets could be vulnerable to broader disappointment, market strategists said.

Dozens of companies will be reporting this week as the earnings season ramps up, including Dow component Goldman Sachs Group Inc.

GS, +1.32%

“From a short-term perspective, we worked off a lot of the euphoria that came after the election, though the decline was pretty shallow. But while valuations are still way too high, stocks remain the only game in town if you’re looking at them versus bonds,” said Paul Nolte, portfolio manager at Kingsview Asset Management.

See more: Stocks ride into North Korea ‘danger zone’ before Monday open

The lack of a nuclear test from North Korea over the weekend did much to reverse defensive positions adopted by traders heading into the weekend, said Ian Winer, director of equity trading at Wedbush Securities, in an interview. But, as with Thursday’s preholiday trading, volumes are light again Monday.

Separately, investors digested news of a recent U.S. bombing mission over Afghanistan and the fallout from an election in Turkey that gave the office of President Recep Tayyip Erdogan additional powers, sparking protests.

“These issues, based on where they stand right now, probably aren’t the biggest focus for investors. However, they are pivoting the Trump administration away from a domestic agenda. If that means further delays on initiatives like tax reform, that could become a worry for Wall Street,” Nolte said.

Read: U.S. defense stocks easily outperform the broader market

Stocks crept to their highs of the day following comments from Treasury Secretary Steven Mnuchin to the Financial Times that a tax reform plan on President Trump’s desk before August was “highly aggressive to not realistic at this point.”

In the latest economic data, a gauge of New York-area manufacturing slowed considerably in April, retreating from a two-year high. A reading on home-builder sentiment slipped in April, falling modestly from an 11-year high, though it remains in notably positive territory.

Additionally, March retail sales data, released Friday when markets were closed, posted their worst two-month stretch in two years, while March consumer prices fell for the first time in over a year.

Fed Vice Chairman Stanley Fischer was set to speak on Fed communication at Columbia University in New York at 5 p.m. Eastern.

Stock movers: Netflix shares closed up 3% ahead of earnings, which were set for the close of trade on Monday.

Read: United Airlines earnings: can profit beat expectations for fifth-straight quarter?

Read: This is how long it could take for United to recover from its PR disaster

Shares of MoneyGram International Inc.

MGI, +7.75%

 climbed 7.8% after the Alibaba Group Holding Ltd.

BABA, +1.41%

 – controlled Ant Financial Services lifted its bid for the U.S. money-transfer unit to around $1.2 billion. Shares of Alibaba rose 1.4%.

In other deal news, Ashland Global Holdings Inc.

ASH, +2.03%

 said it would buy Pharmachem Laboratories Inc. for $660 million, while Blackstone Energy said it would buy EagleClaw Midstream Ventures for $2.1 billion in debt. Shares of Ashland rose 2%.

Both Eli Lilly Co.

LLY, -4.08%

 and Incyte Corp.

INCY, -10.49%

 tumbled after the Food and Drug Administration failed to approve a drug designed to treat moderate-to-severe rheumatoid arthritis. While Eli Lilly affirmed its outlook, Incyte said it was evaluating the impact the news would have on its results. Shares of Eli Lilly lost 4.1%, while Incyte dropped nearly 11%.

OncoMed Pharmaceuticals Inc.

OMED, -17.15%

 said that its small-cell lung cancer drug had missed its primary and secondary endpoints in a mid-stage clinical trial. Shares sank to close down 17%.

Other markets: European stocks were closed Monday for an extended Easter break, while much of Asia was also shut. The Shanghai Composite Index

SHCOMP, -0.14%

 fell 0.7% after China’s country’s securities regulator urged tighter supervision of listed companies.

Gold prices

GCM7, -0.39%

 settled up 0.3% at $1,291.90 an ounce, while crude-oil prices

CLM7, -0.09%

OPEC faces ‘lose-lose’ decision on extending oil production curbs

The dollar

DXY, -0.03%

 fell 0.2% against major rivals.

—Barbara Kollmeyer in Madrid contributed to this article.

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