U.S. stocks racked up their strongest gain in two months on Monday after Federal Reserve Board Governor Lael Brainard stuck to her dovish stance on interest rates. Bobbi Rebell reports.
Stocks rallied in relief on new signs there would probably not be a rate hike at next week's Federal Reserve meeting. New comments by Fed Governor Lael Brainard urged caution before removing monetary stimulus too quickly, easing those fears. Wall Street had lost ground last week on fears of the impact that a September rate hike have on returns, something Bob Johnson of the American College of Financial Services has studied: (SOUNDBITE) BOB JOHNSON, PRESIDENT, AMERICAN COLLEGE OF FINANCIAL SERVICES, (ENGLISH) SAYING: "What research shows is the direction of interest rates has a huge bearing on market returns. Market returns are decidedly higher when the Fed is lowering rates than when they are raising rates. Now what I didn't was that the market goes down when the Fed is raising rates. It's just returns have been lower. " Big news in the struggling fertilizer business. Canada's Agrium and Potash have agreed on a deal that would create a $36 billion company. If the merger is completed, the new firm will be the largest crop nutrient producer in the world. Perrigo stock rose after activist investor Starboard Value disclosed a stake in the drugmaker and said it must make improvements to revive its stock. In Europe, shares dipped for a third day as investors worried about a near-term rate hike in the United States.