The 500 US bellwether stocks index has found support after shrugging off Middle East tensions.
SP500: Daily Chart
The SP500 is powering ahead from recent lows to test the overhead resistance at 4360.80, which will open the door to further gains.
Stocks were higher despite the militant group Hamas attacking Israel over the weekend, leaving more than 1,100 dead. European government bond yields were lower as investors flocked to the safety of government debt, but trading in the US Treasury market was closed for the Columbus Day holiday.
The weekend attacks also sent crude oil soaring by more than 4% over fears the conflict could escalate, particularly with Iran also being implicated. The US sent a group of warships to the eastern Mediterranean. The surge in crude prices helped to create a rally in energy stocks, while defence stocks also gained.
Further bullishness was helped by comments from Dallas Fed President Logan, who believes the recent jump in long-term Treasury yields may mean less need for the Federal Reserve to raise interest rates again, saying, “Higher term premiums result in higher interest rates for the same setting of the fed funds rate, all else equal. Thus, if premiums rise, they could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening.”
Further proof of that could be from the FOMC minutes from the last rate meeting, while Thursday brings US inflation figures. Earnings season gets underway on Tuesday, with the big banks reporting on Friday.