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Stocks rise to new records as Irma and North Korea worries fade

The New York Stock Exchange is seen on Wall Street.
(Mark Lennihan / Associated Press)

U.S. stocks rallied to record highs Monday as Hurricane Irma weakened without causing as much damage as many had feared, and a North Korean holiday passed without new missile launches. Financial and technology companies led the way.

Investors were relieved as Irma — which faded into a tropical storm but was still deluging Florida and Georgia — didn’t appear to be as bad as it did in projections last week. Insurance companies jumped, especially smaller ones that do a lot of business in Florida. So did travel companies. Home improvement retailers fell; their stocks had climbed recently as investors expected post-storm repairs to boost their business.

Tensions between the U.S. and North Korea have been on investors’ minds recently, and global markets advanced Monday as the situation didn’t get any worse. In the U.S., bond prices fell, sending yields higher. That helped banks’ stocks because rising yields mean banks can charge higher interest rates on loans.

“This is what happens when the market sells off in the face of what is really an awfully good fundamental environment,” said Jim Paulsen, chief investment strategist for the Leuthold Group. He said investors are again focused on strong economic growth in the U.S. and many other regions.

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Although a gridlocked federal government hasn’t done much to stimulate the economy, Paulsen said the weakening dollar and falling interest rates could give U.S. businesses, especially technology companies, a big boost.

The Standard & Poor’s 500 index notched its biggest gain since late April: It jumped 26.68 points, or 1.1%, to finish at a record high of 2,488.11. The Dow Jones industrial average climbed 259.58 points, or 1.2%, to 22,057.37. The Nasdaq composite advanced 72.07 points, or 1.1%, to 6,432.26, three points below the record closing high it set Sept. 1. The Russell 2000 index of smaller-company stocks rose 15.40 points, or 1.1%, to 1,414.83.

That wiped out a month of losses linked to international tensions as well as worries about the lingering effects of Hurricanes Harvey and Irma, which are expected to slow the U.S. economy over the next few months.

Irma weakened shortly before it came ashore Sunday. It has caused severe flooding and knocked out power to millions. The damage is still being assessed, but insurers climbed Monday as investors anticipate they won’t have to pay out as much in claims as expected just a few days ago.

HCI Group leaped 17.5% to $36.15. Heritage Insurance soared 21.6% to $11.39. Larger insurers also rallied. Reinsurance company XL Group advanced 5% to $40.55. Travelers rose 2.3% to $122.56.

Investors also expected that travel-related companies won’t take such a big hit from the storm. Royal Caribbean Cruises climbed 3.6% to $121.69. American Airlines climbed 5.2% to $45.86. Travel booking site Priceline ticked up 1.7% to $1,868.86.

Investors’ sense of relief pushed orange juice futures down a bit. Futures had risen to $1.54 a pound Friday from $1.30 at the end of August. They slipped to $1.51 a pound Monday.

North Koreans observed the 69th anniversary of the country’s founding, but the country did not test another intercontinental ballistic missile, as South Korea’s government had warned it might.

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Bond prices sank. The yield on the 10-year Treasury note rose to 2.13% from 2.05%. Bank shares rose. JPMorgan Chase went up 1.6% to $89.79. Fifth Third Bancorp advanced 2.4% to $25.70.

In another sign investors were willing to take more risks, gold fell $15.50, or 1.1%, to $1,335.70 an ounce. Silver fell 22 cents, or 1.2%, to $17.90 an ounce.

Technology companies helped lead the way. Apple, which will unveil its newest iPhone on Tuesday, rose 1.8% to $161.50. Facebook rose 1.5% to $173.51. Microsoft ticked up 1.1% to $74.76, and Mastercard climbed 3.5% to $142.02.

Home improvement retailers fell. They climbed last week after investors anticipated their business could pick up as homeowners were affected by the storm. Home Depot fell 0.8% to $158.37 and Lowe’s declined 1.4% to $77.50.

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Benchmark U.S. crude rose 59 cents, or 1.2%, to $48.07 a barrel in New York. Brent crude, used to price international oils, rose 6 cents to $53.84 a barrel in London.

Wholesale gasoline fell 1 cent to $1.63 a gallon. Heating oil fell 2 cents to $1.74 a gallon. Natural gas rose 6 cents to $2.95 per 1,000 cubic feet.

In other commodities trading, copper rose 2 cents to $3.07 a pound.

The dollar rose to 109.34 yen from 107.79 yen.

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Germany’s DAX gained 1.4% and the French CAC 40 rose 1.2%. The FTSE 100 index in Britain picked up 0.5%. The benchmark Nikkei 225 index in Japan jumped 1.4% as the yen slipped, which eased pressure on exporters. The Kospi in South Korea advanced 0.7%, and Hong Kong’s Hang Seng added 1%.


UPDATES:

2:35 p.m.: This article was updated with closing prices, context and analyst comment.

This article was originally published at 6:55 a.m.

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