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Zurich - US stocks advanced, withthe Standard & Poor’s 500 Index rising for a fifth day, as investors speculated that the worst has been priced into shares and growth in the economy will be strong enough to support corporate profits.
Equities have seesawed between gains and losses since August’s selloff, as investors wrestle with concerns about a slowing global economy and confusion over the Federal Reserve’s plans.
Disappointing employment data on Friday pushed out expectations for an interest-rate increase, sending the dollar lower.
The S&P 500 rose 0.8% to 1 966.51 at 15:32, after the benchmark gained 1% last week.
“Those people that wanted to sell have already sold by now, and now the market is coming up a little,” said Otto Waser, chief investment officer at R&A Research & Asset Management AG in Zurich. “Given the current market reaction, the correction seems to be over.
The market should stabilize and either rally now or in the first quarter of next year. We’re looking at a very modest pace of rate increases anyway.”
Friday saw equities’ biggest intraday turnaround in four years as commodity related companies and multinationals that benefit from a weaker dollar led a rally after the jobs report.
A lower dollar boosts American multinational companies’ profits when their overseas earnings are converted back to the US currency.
The odds of a Fed liftoff on rates this month have fallen to 8% since the payroll report, and most futures traders don’t see an increase from near zero until at least March. The chance for a January increase was priced at 41%, down from about 52% before the September jobs report.
Investors will look to data later today for indications on the health of the world’s biggest economy. The Institute for Supply Management’s non-manufacturing index grew at a slower pace in September for the second consecutive month, according to economists’ estimates.
Attention will also shift to earnings this week, with Alcoa unofficially kicking off the latest reporting season after the markets close on October 8. Analysts project earnings for S&P 500 members dropped 6.9% in the third quarter.
Still, a Fed measure of corporate income has posted its biggest quarterly increase since 2012, suggesting the overall picture for profits may be skewed by downgrades at energy producers combating weak oil prices.
