After wavering around break even in morning trading on Monday, stocks started rising steadily higher after Senate Democrats said they’ll support a bill that would fund the federal government for three weeks. All three major U.S. stock indexes ended the day posting new record highs.
The political deal to reopen the government came after Republican leaders promised Democrats they’ll soon address immigration and other contentious political issues. The government shut down after the previous funding bill expired Friday.
The Standard & Poor’s 500 index jumped 23 points, or 0.8 percent, to close at 2,833, after closing at another all-time high on Friday. The Dow Jones industrial average galloped 143 points higher, or 0.6 percent, to end at 26,215. The Nasdaq composite added 72 points, or 1 percent, finishing at 7,408. The Russell 2000 index of smaller-company stocks gained 6 points, or 0.8 percent, to close at 1,605.
“Progress toward ending the U.S. government shutdown gave a modest boost to risk sentiment, leaving equities higher on the day,” TD Securities analysts said in a note.
The threat of a shutdown has loomed for months and still isn’t completely resolved, but it hasn’t troubled Wall Street too much because investors doubt it would have much effect on the market or the economy unless it persists for a long time. Smaller companies, which could be hurt the most by a reduction in consumer spending or confidence, switched from small losses to solid gains.
In a research briefing, economist Gregory Daco of Oxford Economics said the chances of repeat performance of the government shutting down are 35 percent when this deal expires on Feb. 9. Even worse, though, Daco noted that the looming debt ceiling battle in March could “disrupt markets and confidence more significantly.”
Energy and technology companies advanced Monday as U.S. stocks continue their bull run. High-dividend stocks were also up as bond yields held steady. Yields had climbed to their highest level in more than three years last week.
Sanofi (SNY) said it will buy hemophilia treatment maker Bioverativ for $105 a share, a deal the companies valued at $11.6 billion. Bioverativ makes Eloctate and Alprolix, which treat two different types of hemophilia. It’s part of Sanofi’s growing focus on rare diseases, which can command high prices at a time generic medications for more common ailments are falling.
Bioverativ (BIVV) jumped $39. 68, or 61.9 percent, to close at $103.79, while Sanofi lost $1.40, or 3.1 percent, to end at $43.20.
Meanwhile Celgene (CELG) will pay $87 a share, or $9 billion, for Juno Therapeutics (JUNO). Juno is one of several companies developing CAR-T cancer therapies, which genetically engineer patients’ blood cells into “living drugs” that fight cancer. The stock surged last week on reports Celgene might buy the company. On Monday Juno rose $18.19, or 26.8 percent, to end at $86, while Celgene gained 26 cents to close at $102.91.
Investors Carl Icahn and Darwin Deason are calling for the removal of Xerox (XRX) CEO Jeffrey Jacobson as the copier company reportedly seeks a deal with camera company Fujifilm. The Wall Street Journal reported last week that the two companies are having talks. Icahn and Deason own 15 percent of Xerox, and they said Monday they don’t trust Jacobson to lead the potential negotiations.
Xerox stock rose 84 cents, or 2.6 percent, to end at $32.64.
Benchmark U.S. crude rose 29 cents to $63.66 a barrel in New York. Brent crude, used to price international oil, added 29 cents to $68.90 a barrel in London.
Wholesale gasoline gained 2 cents to $1.88 a gallon. Heating oil stayed at $2.06 a gallon. Natural gas climbed 4 cents to $3.22 per 1,000 cubic feet.
Bond prices gave up an early gain. The yield on the 10-year Treasury note remained at 2.66 percent, a three-year high. The earlier decline in yields led to gains for stocks that pay big dividends, including phone and utility companies. Their large dividend payments make them an alternative to bonds for investors seeking income, and they tend to do better when yields fall.
The dollar rose to 111.10 yen from 110.60 yen from 110.98 yen. The euro edged up to $1.2252 from $1.2234.
Gold gained $1.20 to $1,334.30 an ounce. Silver lost 5 cents to $16.99 an ounce. Copper gained 1 cent to $3.20 a pound.
The French CAC 40 added 0.3 percent, and Germany’s DAX edged up 0.2 percent. In Britain, the FTSE 100 lost 0.2 percent. Tokyo’s Nikkei 225 rose less than 0.1 percent, and Hong Kong’s Hang Seng advanced 0.4 percent. The Kospi in South Korea lost 0.7 percent.
