• By The Financial District

Stocks Rally As Euro Soars On Likely Rate Hikes

US and European stocks mostly rallied on Monday with the S&P 500 trading just above bear market territory, while the euro jumped after the European Central Bank said it was likely to lift its deposit rate out of negative territory by September, Herbert Lash and Marc Jones reported for Reuters.

Photo Insert: The European Central Bank having said it was likely to lift its deposit rate out of negative territory caused the euro to make a jump.

Oil prices slid and gold extended recent gains, but the dollar fell further as investors cut their bets on more advances in the greenback based on market expectations of yields moving higher still from Federal Reserve monetary tightening.

The MSCI all country world index gained 1.14%, though it was still down about 17% from its record high in January, and the pan-European STOXX 600 index was up 0.99%.

Stocks on Wall Street also gained, though the Nasdaq lagged after it briefly traded in the red.

The yield on 10-year Treasury notes was up 5 basis points at 2.837%, but almost 40 basis points lower than a multi-year high of 3.203% set two weeks ago. The Dow Jones Industrial Average rose 1.65%, the S&P 500 gained 1.33% and the Nasdaq Composite added 0.76% in choppy trade.

All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

Value stocks rose 1.49%, or more than the 1.15% gain in growth stocks.

Stock investors are under the illusion that the Fed will rescue the market from further decline by easing monetary policy, or what has become known as the Fed "put," said Steven Ricchiuto, US chief economist at Mizuho Securities.

Market & economy: Market economist in suit and tie reading reports and analysing charts in the office located in the financial district.

"It's going to be a very, very sluggish growth environment and the Fed's not going stand in the way of it," Ricchiuto said. "You're seeing the bond market go down in yield. That's been saying to the equity market that the put isn't there and therefore the equity market needs to adjust as well."

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