Monday saw market rallies across the globe with both the S&P 500 and Dow Jones Industrial Average both closing up near 1.8 percent and European stocks recovering 3 percent.
The Standard & Poor’s 500 Index posted its longest winning streak this year, on speculation that the worst has already happened and that the economy will grow sufficiently to support corporate profits.
Analysts were optimistic that the Federal Reserve would see the weaker dollar and the disappointing employment data released on Friday would motivate it to finally initiate an interest rate increase.
However, the odds of a Fed liftoff on rates this month have fallen to 10 percent and most futures traders don’t see an increase from near zero until at least March.
Postponed Rate Hike
According to Michael Purves, chief global strategist at Weeden & Co in Greenwich, Connecticut, “Pushing out interest rate hike expectations to next year has been critical. Today is simply a response to oversold conditions.”
The weaker dollar should help boost American multinational companies’ profits when their overseas earnings are converted back to the U.S. currency.
The S&P 500 rose 1.8 percent to 1,987.05 at 4 p.m. in New York, and is up 5.6 percent since last Monday’s close. The Dow climbed 304.06 points, or 1.9 percent, to 16,776.43. The Russell 2000 Index increased 2.5 percent, the most in more than a month, and is 5.3 percent higher since ending its longest losing streak in nine years last week.