U.S. stocks advanced and gold erased gains as the impact from the Paris attacks on global financial markets faded Monday, with investors refocusing attention on the prospects for growth worldwide amid the prospect for higher interest rates in America.
The Standard & Poor's 500 index halted a three-day slide, extending gains in afternoon trading after rising through its average price for the past 100 days. European equities shrugged off declines to close higher as France expanded an aerial bombardment in Syria. Oil rose after failing to drop through $40 a barrel. An advance in gold waned, while the euro weakened toward a six-month low vs. the dollar.
“We may not be seeing as much of a negative reaction as we could have if the tragedy occurred two weeks ago when the market was up within 1% of the highs,” said Frank Cappelleri, a market technician at Instinet in New York. “Not to say that we won't get downside going forward, but today at least, knowing where the market has come from, it's helped it at least to be stable.”
The history of terror incidents around the world in the past 15 years shows market reactions are often sharp and, increasingly, short-lived. European shares initially retreated before erasing the loss in trading about one-fifth below the 30- day average. While gold climbed for the first time in five days, its gains faded as shares reversed.
Executives contacted by Pensions & Investments' staff declined to comment on the impact of the Paris attacks.
The S&P 500 rose nearly 1.5% in New York, halting a three-day slide that capped the gauge's worst week since August. Energy shares surged, consumer staples companies rallied and defense companies led gains among industrial shares.
The Stoxx Europe 600 Index rose 0.3% and the CAC 40 Index of French stocks, although down, erased losses of more than 1%.
“Terrible as these events are on a human level, from a market perspective the impact tends to be transitory,” said Richard McGuire, head of rates strategy at Rabobank International in London.