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Monday Recap: Sarhan in CNBC: Stocks rise as energy gains nearly 2%; US election in focus

Monday, October 10, 2016 10:52am
Stocks traded higher on Monday, following the second presidential debate while investors digested a rise in oil prices.
“You have more clarity from the U.S. election, with the uncertainty from that heading lower; you’ve got less uncertainty from OPEC, and that’s bullish for stocks,” said Adam Sarhan, CEO of Sarhan Capital.
The Dow Jones industrial average rose 150 points, with Apple and Boeing contributing the most gains. The S&P 500 gained more than 0.7 percent, with energy rising about 1.8 percent to lead all sectors higher.
“A breakout appears likely from a short-term momentum standpoint, and we highlight shifts on the macro front that are indicative of risk-on positioning,” said Katie Stockton, chief technical strategist at BTIG. “Consecutive daily closes above the 50-day moving average near 2158 would mark a breakout and set the stage for new all-time highs, with only minor resistance at the August high near 2194.”
The Nasdaq composite advanced approximately 0.9 percent, withApple and the iShares Nasdaq Biotechnology ETF (IBB) gaining more than 1 percent.
U.S. crude rose more than 3.4 percent to $51.54 per barrel while Brent futures hit a one-year high after Russian President Vladimir Putin said Russia is ready to join a proposed cap on oil output by OPEC members.
Putin, speaking at an energy congress in the Turkish city of Istanbul, said he hoped that OPEC members would confirm the decision to adopt quotas for output when the organization meets in November.
“This has removed the uncertainty and now we are in clear,” said Naeem Aslam, chief market analyst at Think Markets, in a morning note. “However, it is important to keep in mind that unless we see the planned action complete, caution may the best practice. If history tells us anything, it is this that these major oil players also have habit to not to respect the agreed agreement.”
Investors were also keeping an eye on the U.S. presidential election.
Donald Trump and Hillary Clinton squared off in a town hall-style debate Sunday night in St. Louis. Trump, in particular, largely stuck to personal attacks, threatening at one point that he would “get a special prosecutor” to look into Clinton’s handling of classified information if he were elected president.
“I would have to agree that the market is taking at [a tie],” said Peter Cardillo, chief market economist at First Standard Financial. “If the market had thought that Trump had gotten a positive gain, we wouldn’t be higher.”
U.S. futures traded higher before the opening bell, with Dow futures rising more than 100 points, while S&P and Nasdaq futures gained 11.75 points and 24.25 points, respectively. Still, Cardillo said trading volume was likely to be light on Monday, given the Columbus Day holiday during which U.S. banks were closed.
The Mexican peso shot more than 2 percent higher against the dollar on Monday. The dollar-Mexican peso trade has been a proxy trade during the election, given Trump’s desire to build a wall along the Mexican border and call to go as far as withdrawing the U.S. from NAFTA if he were elected.
Trump “had a better evening compared to his previous showdown with the former Secretary of State, yet all polls currently suggest that the Democrat will be the one to pack her bags for the White House,” said Jeremy Klein, chief market strategist at FBN Securities.
Trump’s campaign has been under fire recently, after a leaked 2005 video of the GOP standard bearer’s vulgar remarks about women caused uproar.
In economic news, there are no major data due Monday. The U.S. bonds market was also closed due to the Columbus Day holiday.
The dollar rose 0.2 percent against a basket of currencies, with the euronear $1.116 and the yen around 103.5. Currency traders also kept an eye on the British pound, following its “flash crash” against the dollar last week. The pound traded 0.5 percent lower against the dollar, near $1.237.
Overseas, European equities rose after receiving a boost from crude prices. The pan-European Stoxx 600 index gained 0.59 percent. In Asia,stocks closed mixed.
In corporate news, Mylan agreed to pay $465 million to settle charges that it overcharged the government for its EpiPen products. Meanwhile,Twitter shares fell more than 14 percent after Bloomberg reported the company was unlikely to be bought out by another company.
—Reuters contributed to this report.
On tap this week:
Bond market closed for Columbus Day
10 p.m.: Chicago Fed President Charles Evans speaks on the economy and monetary policy
Earnings: Alcoa, Fastenal
6 a.m.: NFIB survey
11 a.m.: Minneapolis Fed President Neel Kashkari
Earnings: CSX
8 a.m.: New York Fed President Bill Dudley speaks with the Business Council of New York State
9:40 a.m.: Kansas City Fed President Esther George speaks at the Federal Reserve Bank of Chicago Annual Payments Symposium
10 a.m.: JOLTS
2 p.m.: Fed minutes
Earnings: Taiwan Semiconductor, Unilever, First Republic Bank, Sky, Marriott Vacations, Winnebago
8:30 a.m.: Jobless claims
8:30 a.m.: Import prices
12:15 p.m.: Philadelphia Fed President Patrick Harker speaks on the economic outlook
2 p.m.: Federal budget
9 p.m.: Minneapolis Fed President Neel Kashkari speaks at a town hall on “Ending too big to fail,” the role of the Federal Reserve and other topics
Earnings: Citigroup, JPMorgan Chase, Wells Fargo, PNC Financial Services, Infosys, Commerce Bancshares
8:30 a.m.: Retail sales
8:30 a.m.: PPI
10 a.m.: Consumer sentiment
10 a.m.: Business inventories
1:30 p.m.: Fed Chair Janet Yellen speaks on “Macroeconomic research after the crisis”
9 p.m.: Minneapolis Fed President Neel Kashkari speaks at a town hall on “Ending too big to fail,” the role of the Federal Reserve and other topics
*Planner subject to change. All times Eastern.