Inevstors took a deep breath and exhaled on Monday after a tumultuous week and a weekend without further drama in US-North Korea escalating war of words.
- Wall Street rebounds led by financials and tech
- Former US Treasury Secretary issues sharp criticism of current Treasury
- CEO of Merck takes moral stand
The Secretary of State, Rex Tillerson and Secretary of Defense, James Mathis, generated calm after a Wall St Journal opinion piece over the weekend that said they would utilise diplomacy with North Korea. Stocks had their best performance since April this year. Peter Cardillo, chief market economist at First Standard Financial called the bounce a "relief rally...that is the rhetoric has toned down, for the moment," in a CNBC article.
Banks and technology emerged as leading market sectors as investor appetite for risk returned. Haven assets turned downward as US Treasuries and gold sank. The Dow closed up +130 points or 0.66% just shy 22,000 with a broad sector rally with the exception of oil and gas. The S&P 500 up +1% and Nasdaq rose +1.34%.
- Dow 21,993 +0.66%
- S&P 500 2,439 +1%
- Nasdaq 6,340 +1.34%
- Russell 2000 1,394 +1.46%
- NYSE Composite 11,856 +0.79%
- Gold 1,287 -0.49%
- Oil WTI $47 -2.70%
- 10-Year Treasury Yield 2.25% +0.02%
Yields on Treasuries and the dollar rose along with the stock market. The dollar was up against the Japanese yen and Swiss franc. Investors view both currencies traditionally as safe havens piled in during last week's US-North Korea tension.
Pushing up the index was Bank of America and Wells Fargo - among the day's popular stocks closing up +2.35% and +1.73% respectively. S&P 500 Banks Industry Index was up +1.73% helped by the impact of investors selling off haven assets.
Lawrence Summers calls Steve Mnuchin's Treasury 'amateurish'
The former US Treasury secretary under Obama, Lawrence Summers, in a column in Sunday's Financial Times discussing economic and political challenges facing the Federal Reserve was sharply critical of the Treasury run by current secretary Steve Munchin.
Summers wrote that while overall performance of the Fed under Janet Yellen has done well in recent years, he would have preferred a slower pace in raising rates and that the Fed "over-assessed future inflation, growth and monetary tightening at some cost to its credibilty."
However, Summmers saved his sharpest criticism for both the Treasury ran by Steve Mnuchin and President Trump. In describing what he called a profund political challenge ahead for the Fed, he said there was more "risk now of presidential interference with the Fed than at any time since Richard Nixon.
In dealing with international matters, the Fed is partnered with an understaffed and amateurish Treasury and a president who is dissipating US credibility."
Merck's CEO 'takes a stand against intolerance'
Meanwhile, at the start of the week, add Merck's chief executive, Ken Frazier to a forming list of CEOs resigning from their advisory capacity to the White House in protest.
Frazer resigned from President Trump's American Manufacturing Council on Monday on Twitter stating that it as "CEO of Merck and a matter of personal conscience, I feel a responsibility to take a stand against intolerance and extremism."
Frazier's resignation came two days after President Trump's failure to condemn white-nationalists immediately following the violence that erupted during their march in Charlottesville, VA.
Frazier is one of four African-American CEOs in the Fortune 500. President Trump responded in typical style on Twitter: "Now that Ken Frazier of Merck Pharma has resigned from President's Manufacturing Council, he will have more time to LOWER RIPOFF DRUG PRICES!