Strong Earnings, Merger Announcements Drive U.S. Stocks Higher

U.S. equity indices are in the spotlight on Monday with the Dow Jones Industrial Average trading about 80 points higher shortly after the cash market opening. The S&P 500 Index is up 0.45% and the NASDAQ Composite is 0.85% higher.

The Dow was supported early in the session, driven higher by 3M and Boeing. Real estate and information technology contributed the most to the S&P’s gains.

There was a somewhat bullish buzz even before the market opened after AT&T reached a deal over the week-end to buy Time Warner for more than $85 billion.

In other news, St. Louis Fed President James Bullard said in a speech on Monday that low interest rates are likely to be the norm over the next 2-to-3 years, as the U.S. is under a low-productivity growth regime. This somewhat dovish comment helped underpin the indices shortly before the opening.

Crude Oil

U.S. West Texas Intermediate Crude Oil was down 1.35% at $50.16 on Monday after Iran said it wanted to be exempt from an OPEC deal which would cut output. The news is potentially bearish because it opens the down to other countries requesting similar treatment. This would threaten OPEC’s entire plan to curtail production.

Forex

The U.S. Dollar was under pressure partly because of technically overbought conditions and lower U.S. Treasury yields. Early in the session, the December U.S. Dollar Index futures contract reached its highest level since March 2, 2016 before sellers came in at 98.825 to stop the rally.

The GBP/USD traded slightly better on extremely lower volatility as investors continue to digest the recent steep sell-off. Support for the British Pound has eroded recently after the U.K. announced it would make its formal request to leave the European Union at the end of March.

The EUR/USD was boosted by better-than-expected PMI data from across the Euro Zone. French Flash Manufacturing PMI beat the estimate along with German PMI and the Euro Zone PMI.

In U.S. News, Flash Manufacturing PMI came in at 53.2, beating the 51.6 estimate.

Gold

Gold prices firmed in reaction to the weaker U.S. Dollar, however, gains were capped by the strong performance in the U.S. stock market.