S&P 500 surges toward record high as fear fades

By Noel Randewich

(Reuters) - The S&P 500 surged toward a record high on Monday with its strongest one-day performance since April after tropical storm Irma did less damage than expected in Florida, and North Korea did not test missiles over the weekend, which some had feared.

All 11 major S&P 500 sectors rose, led by financial stocks, with insurers advancing as Irma, once ranked as one of the most powerful hurricane recorded in the Atlantic, lost power.

Irma caused severe flooding in many Florida cities and left more than 6 million homes and businesses without power, but damage appeared to be less than expected. That relieved investors, especially in the wake of Hurricane Harvey, whose devastation is estimated to dent third-quarter economic growth.

Geopolitical tensions eased after North Korea did not mark its founding day on Saturday with another launch of a long-range missile, which the United States and its allies had been bracing for.

"It is a risk back on situation, people are going back into the market," said Neil Massa, senior equity trader at Manulife Asset Management in Boston. "For now, it is a relief rally for things on both ends - geopolitical and weather wise."

At 2:27 pm ET, the Dow Jones Industrial Average was up 1.19 percent at 22,057.12 points, on track for its strongest day since early March.

The S&P 500 gained 1.04 percent to 2,487.1 points, while the Nasdaq Composite added 1.11 percent to 6,430.77.

The CBOE volatility index <.VIX>, a widely-followed measure of market anxiety, fell 1.33 points to 10.79.

The S&P 500 financial index <.SPSY> jumped 1.64 percent, with JPMorgan up 1.83 percent and insurer Travelers up 2.7 percent.

With investors less worried about Irma's impact, insurers Universal Insurance Holdings and HCI Group surged more than 12 percent, while Heritage Insurance soared 21 percent.

"The fear that the hurricane was going to be this massive disaster has receded. And that's really helping the sector," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

Apple rose 1.74 percent a day ahead of the expected launch of a new iPhone, providing the biggest boost to the Nasdaq and S&P 500.

Tesla rose 5.50 percent on news that China is studying when to ban the production and sale of cars using traditional fuels.

Teva jumped 19 percent after the generic drugmaker named a new chief executive.

Advancing issues outnumbered declining ones on the NYSE by a 4.02-to-1 ratio; on Nasdaq, a 2.45-to-1 ratio favoured advancers.

(Additional reporting by Sruthi Shankar in Bengaluru; Editing by Nick Zieminski)