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US Stocks Climb; Gold, Silver Fall 02/02 15:20
U.S. stocks rose on Monday following sharp swings that shook financial
markets overnight, including tumbles for Asian stocks. Gold and silver prices
sank further following their latest wild moves.
NEW YORK (AP) -- U.S. stocks rose on Monday following sharp swings that
shook financial markets overnight, including tumbles for Asian stocks. Gold and
silver prices sank further following their latest wild moves.
On Wall Street, the S&P 500 added 0.5% and snapped a three-day losing
streak. The Dow Jones Industrial Average rose 515 points, or 1.1%, and the
Nasdaq composite gained 0.6%.
Stocks of companies that make computer storage helped lead the market,
adding to gains from last week following several profit reports that topped
analysts' expectations. Airlines and cruise-ship operators were also strong,
benefiting from a sharp easing of oil prices.
The center of action in financial markets was again precious metals, where
momentum has suddenly halted after gold's price roughly doubled in just 12
months.
Gold briefly dropped below $4,500 per ounce in the overnight hours, down
more than $1,000 from its high point reached just last week. It then climbed
back above $4,800 before settling at $4,652.60, down 1.9% from Friday.
Silver's price has been on an even wilder ride recently, and it swung from a
9% loss overnight to a modest gain and back to a loss of 1.9%.
Gold and silver prices had surged as investors looked for safer things to
own amid a wide range of worries, including a Federal Reserve that may be set
to become less independent, a U.S. stock market that critics say is expensive,
threats of tariffs and heavy debt loads for governments worldwide.
Their prices cratered on Friday, including a 31.4% plunge for silver. Some
on Wall Street saw it as a result of President Donald Trump's nomination of
Kevin Warsh as the next chair of the Fed. Warsh's reputation as a former Fed
governor may have raised expectations that he may keep interest rates high to
fight inflation, which would reduce the need to hide out in gold and silver for
protection.
But many on Wall Street are also skeptical of that initial reading and say
the expectation from Trump is likely that Warsh will cut interest rates,
something the president has been demanding. That could give the economy a boost
but also worsen inflation over the long term.
The Fed's chair has a big influence on the economy and markets worldwide by
helping to dictate where the U.S. central bank moves interest rates. That
affects prices for all kinds of investments, as the Fed tries to keep the U.S.
job market humming without letting inflation get out of control.
The recent swoons for gold and silver may also simply mark the return of
gravity for two investments whose price shot very high, very fast. They're
likely more about the washout for some traders who had borrowed money to bet on
metals' prices continuing to soar, rather than about a wholesale change in
expectations for demand for metals, according to Darrell Cronk, chief
investment officer for Wealth & Investment Management at Wells Fargo.
On Wall Street, Sandisk leaped 15.4% to lead the S&P 500. The data-storage
company added to its 6.9% gain from Friday, after it reported stronger profit
for the latest quarter than analysts expected. It credited demand created by
the artificial-intelligence boom, among other things.
That helped offset a 2.9% drop for Nvidia, whose chips are powering much of
the world's move into AI technology. The losses were worse in Asia, where AI
winners plunged. South Korea's Kospi fell 5.3% from its record for its worst
day in almost 10 months after chip company SK Hynix lost nearly 9%.
The Walt Disney Co. fell 7.4% even though the entertainment giant reported a
stronger profit for the latest quarter than analysts expected. It warned of
challenges that are keeping international visitors away from its U.S. theme
parks, among other things.
Oil prices dropped more than 4% after Trump told reporters that Iran is
"seriously talking to us." It's a potential signal of improving relations
between the two countries, which could keep oil flowing easily around the world.
The drop in oil prices could mean less painful fuel bills for airlines and
cruise ships. That helped Carnival steam 8.1% higher, and United Airlines climb
4.9%.
All told, the S&P 500 rose 37.41 points to 6,976.44 and finished just shy of
its record set last week. The Dow Jones Industrial Average added 515.19 to
49,407.66, and the Nasdaq composite gained 130.29 to 23,592.11.
In the bond market, Treasury yields edged higher after a report said that
U.S. manufacturing grew last month, when economists were expecting a
contraction. The yield on the 10-year Treasury erased an earlier dip and rose
to 4.28%, up from 4.26% late Friday.
Such strong figures could persuade the Federal Reserve to stay on pause with
its cuts to interest rates. The next big set of data that could sway the Fed
was supposed to come on Friday, when the U.S. government was due to update the
nation's unemployment rate. But that report has been postponed because of the
partial federal government shutdown.
In stock markets abroad, European indexes rose roughly 1% following a
washout in Asia. Japan's Nikkei 225 fell 1.3%, while stocks fell 2.2% in Hong
Kong and 2.5% in Shanghai.
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