Stocks rallied on Monday, with the Dow industrials rebounding after a five-day losing streak, as voting in Crimea passed without violence and after economic reports had U.S. manufacturing output jumping the most in six months in February.
"We've gotten used to markets that are going to price in the worst-case scenario," said Art Hogan, chief market strategist at Wunderlich Securities, of the possibility of violence or military conflict during the weekend as a referendum was held in Crimea on whether to join Russia.
"Even when things may not be pretty, so to speak, when it's expected," the market is typically satisfied, said JJ Kinahan, chief strategist at TD Ameritrade, who noted the CBOE Volatility Index (VIX), a measure of investor uncertainty, on Monday fell 12 percent to 15.70. Investors "were paying up on Friday for protection going into this weekend, just in case, which allowed them to keep their long positions."
On Monday, President Barack Obama imposed sanctions against Russian officials after voters in Crimea on Sunday endorsed separating from Ukraine to join Russia. The U.S. announcement came after the European Union announced travel bans and asset freezes on 21 people.
In a nationally televised news conference, Obama called the sanctions an initial step, and said the U.S. was ready to impose further sanctions should Russia escalate the situation.
Economic reports had U.S. industrial output rising in February; up 0.8 percent, and better than the 0.1 percent rise anticipated by economists polled by Reuters. And, the March Empire State Factory Index climbed to 5.61 in March after a reading of 4.48 the prior month.
Stocks maintained gains after a monthly measure of home builder confidence rose a tepid 1 point to 47 in March, with the latest reading still below 50, the line between positive and negative on the survey released by the National Association of Home Builders.
"For a market that was down five days in a row last week, it looks like it's going to test a bit of a reflex rally here," said Hogan.