US 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.
Gold and silver in focus
The centre 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 $US4,500 per ounce in the overnight hours, down more than $US1,000 from its high point reached just last week. It then climbed back above $US4,800 before settling at $US4,652.60, 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 US 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.
Rut cuts still a possibility
But many on Wall Street are also sceptical 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 US central bank moves interest rates. That affects prices for all kinds of investments, as the Fed tries to keep the US 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.
Oil prices drop on Iran talks
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.
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 US 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 US 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.
The Associated Press
