NEW YORK (Reuters) - Wall Street closed higher on Monday as investors appeared less concerned about possible retaliation for U.S.-led missile strikes on Syria, and the yield curve reached its flattest level in over a decade.
Saturday’s strikes were the biggest intervention by Western countries against Syrian President Bashar al-Assad, whose ally Russia is facing further U.S. economic sanctions over its role in the conflict.
“The catalyst had been the concern about trade issues, which is calming down. The bombing in Syria looks to be an event rather than an ongoing thing and it was a coalition,” said Jeffrey Carbone, managing partner, Cornerstone Wealth, in Huntersville, North Carolina.
“Now we get to concentrate on fundamentals,” he said, adding that earnings season is beginning as economic data has shown an accelerating economy.
President Donald Trump said on Monday that he will nominate economist Richard Clarida as Federal Reserve Vice Chairman, adding another hawkish voice at the central bank.
The news flattened the spread between five- and 30-year Treasury bonds US5US30=TWEB to 34.6 basis points, the lowest in over 10 years.
Expectations of further interest rate increases lifted the short end of the curve earlier in the day, led by the two-year government bond US2YT=RR, which hit 2.394, its highest since September 2008.
The Dow Jones Industrial Average .DJI rose 212.9 points, or 0.87 percent, to 24,573.04, the S&P 500 .SPX gained 21.54 points, or 0.81 percent, to 2,677.84 and the Nasdaq Composite .IXIC added 49.64 points, or 0.7 percent, to 7,156.29.
Hopes that the strike against Syria would not escalate also spurred investors to shed the U.S. dollar.
The greenback fell 0.41 percent against a basket of major currencies .DXY, while the euro EUR= rose 0.4 percent to $1.2378.
European shares eased, adding to a mixed picture from lower Asian stock markets and suggesting that a degree of caution remains.
The pan-European FTSEurofirst 300 index .FTEU3 lost 0.46 percent. MSCI’s gauge of stocks across the globe .MIWD00000PUS, which tracks shares in 47 countries, gained 0.39 percent, though emerging market stocks dipped 0.58 percent.
The yields on German DE10YT=RR and 10-year U.S. government US10YT=RR bonds, among the most liquid and safe assets in the world, touched their highest levels in nearly two weeks and four weeks, respectively.
That was partly as attention turned to what is expected to be a robust first-quarter U.S. corporate earnings season, which begins in earnest this week.
Some other traditional safe-haven bets held firmer, with gold XAU= and Japan’s yen JPY= edging higher.
Dealers were keeping a wary eye on Japanese politics after a survey showed support for Prime Minister Shinzo Abe had fallen to 26.7 percent, the lowest since he took office in 2012.
Meanwhile, oil prices fell on waning investor concern about Syria. U.S. crude CLcv1 fell 1.62 percent to $66.30 per barrel and Brent LCOcv1 was last at $71.49, down 1.5 percent on the day.
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Additional reporting by Richard Leong, Sinéad Carew and Kate Duguid in New York; Editing by Steve Orlofsky and Alistair Bell