Dow soars 465 points as Trump news, stimulus talks power U.S. stocks

Wall Street's optimism also was heightened by the prospect of another round of massive economic relief from Congress as lawmakers and the White House continue negotiations with less than a month before Election Day.

The Dow Jones industrial average shot up 465.83 points, or 1.7%, to close at 28,148,64. The S&P 500 gained 60.18 points, or 1.8%, to end at 3,408.60 while the Nasdaq composite climbed 257.47 points, or 2.3%, to 11,332,49.

"Signaled improvements in President Trump's health and increasing optimism around renewed stimulus talks are certainly driving the market rally today, and a widening lead of Biden in the polls is also helping to calm market jitters," said Nicole Tanenbaum of Chequers Financial Management. But, as she and other analysts noted, volatility will continue as investors assess the president's health, weigh the prospects of government stimulus and seek clarity about the Nov. 3 election.

September proved to be a tumultuous month of trading. Sentiment soured after a summer of explosive gains as economic data and high unemployment rates tempered recovery hopes. Analysts have cautioned that many of the stocks that catapulted the market to record-high levels rose too high and too fast, inviting a sell-off. And as the number of Americans who have died of covid-19 climbed past 200,000, the business community and the broader public were receiving mixed messaging from drugmakers and the Trump administration about the timeline for safe and viable vaccine.

But reignited stimulus talks have lifted investor confidence. On Friday, House Speaker Nancy Pelosi, D-Calif., suggested that Trump's diagnosis could accelerate an agreement, which would potentially include government checks sent directly to households, funding for struggling cities and states, unemployment assistance and money for hard-pressed small businesses. Wavering economic data and large-scale corporate layoffs further underscore the pressure for Democrats and the White House to strike a deal, Tanenbaum said.

Kristina Hooper, chief global market strategist at Invesco, said she suspects Trump contracting covid-19, the illness caused by the novel coronavirus, could lead to broader adoption of masks as average Americans recognize that if the president of the United States can contract the virus, they can too. "More masks means less likelihood of the spread of covid-19, which should be a significant positive for the economy," she said. "I also wouldn't disagree with House Speaker Pelosi in her assessment that the president's covid-19 diagnosis could spur Senate Republicans into recognizing how virulent the disease is, which could in turn prompt them to agree to a larger stimulus package."

Still, the president's illness and the infection of several U.S. senators adds yet another element of uncertainty to prolonged negotiations that have stalled before, and to the federal government's broader response to the virus.

"While the backdrop is supportive for markets over the coming months, investors should brace themselves for near-term volatility given the uncertainty with upcoming U.S. elections and continued concerns around a delayed economic recovery should we see a second wave of the virus," said Frank Panayotou, managing director at UBS Private Wealth Management.

At least 209,000 people have died in the U.S., and nearly 7.4 million cases have been recorded.

On Friday the Labor Department disclosed the U.S. economy added 661,000 jobs in September, registering the smallest monthly job gains since May, a signal that the broader recovery is slowing. Experts have pointed to the lackluster jobs data as evidence that direct government intervention is necessary to avoid more long-term economic damage. The jobs report, which showed that the unemployment rate has dropped to 7.9%, will be the last monthly summary before the Nov. 3 election.

As news headlines change and more "October surprises" emerge, sharp moves in the markets should be expected, said Michael Farr, president of wealth management firm Farr, Miller & Washington. He noted that this year has seen 42 days of significant market swings of 2% or more. "Don't be surprised if we have more," he said.

European and Asian markets, which also are tracking Trump's health closely, ended in positive territory across the board.

Khoon Goh, head of Asia research at ANZ, said the initial "unknown unknowns" created a level of uncertainty "that previously no one really cared to think about," he said. "It prompts investors to sell first and ask questions later."

Stock markets slumped around the world on Friday, as Trump, 74, and a number of officials close to him tested positive for the virus. The news added uncertainty to the prospects of the U.S. economic recovery, and it called into question how much bandwidth the Trump administration would have to attend to other matters in coming weeks.

The markets appeared to take a measure of reassurance from images of Trump in a motorcade on Sunday, despite critics denouncing the photo opportunity for putting Secret Service officers at risk of infection.

In Asia, Hong Kong's Hang Seng index added 1.3% on Monday, after posting its biggest weekly decline in six months last week. The Nikkei in Japan closed 1.2% higher.

Other factors buoying Asia markets on Monday included upbeat economic data out of Taiwan and South Korea, and hopes that the U.S. fiscal stimulus package would be passed, Goh said.

Australia's ASX200 closed 2.6% higher, its best session since June, on investor hopes of more stimulus, including tax cuts, to be revealed in this week's national budget.

Mainland Chinese stock markets remained closed for the country's extended national day holiday.

European equities also were in the green on Monday, with London's FTSE 100 and the Euro Stoxx 50 both up about 0.6% ad 0.8%, respectively.

#Stocks gain most in almost four weeks; yields rise/ Syndication Washington Post, Bloomberg 

U.S. stocks closed at the highest levels of the day amid optimism that President Donald Trump will leave the hospital and that lawmakers will move closer to providing more stimulus. Treasury yields jumped, and the dollar weakened.

The S&P 500, Nasdaq composite and Dow Jones industrial average all rebounded from Friday's swoon in the wake of Trump's coronavirus disclosure. Regeneron Pharmaceuticals rallied after Trump was given an experimental antibody treatment made by the drugmaker. Energy, health care and technology shares were the biggest gainers in the S&P, pushing the benchmark index up by the most in almost four weeks.

"Fiscal stimulus continues to be a wild card for the market, and uncertainty around the health of the president certainly looms large," said Chris Larkin, managing director of trading and investment product at E-Trade Financial. "So while there's a lot of noise out there, experienced traders may find bullish opportunities."

Trump said on Twitter that he would leave Walter Reed hospital Monday evening after being treated since Friday for covid-19, the illness caused by the novel coronavirus. With less than a month until Election Day, Trump's hospitalization has jolted the presidential campaign, forcing him to scrap rallies and other events as polls show him trailing Democratic nominee Joe Biden nationally and in swing states.

On the stimulus front, Trump tweeted from the hospital that a deal needs to get done. House Speaker Nancy Pelosi, D-Calif., was optimistic on Friday that a bipartisan stimulus bill can be done.

"Absent of vaccine breakthrough, we're in an economy that is modestly recovering from the lows of March and April, but it can only go so far," said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management's Ascent Private Wealth Group. "Areas of the economy that are susceptible are still feeling the pain. That's why we need so much stimulus from the Federal Reserve and Congress."

Traders also pointed to polls suggesting a stronger lead for Biden and the possibility that a clear winner will emerge from the Nov. 3 election. U.S. markets have been nervous in recent weeks about a close election and the risk of a long and messy legal battle.

Elsewhere, consumer companies and banks led a broad advance among European stocks. Equities in Asia notched gains, while crude oil rebounded from a three-week low and gold advanced.

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Here are some key events coming up:

- The Reserve Bank of Australia is forecast to keep interest rates and its three-year yield target unchanged at 0.25% on Tuesday

- Also on Tuesday, Fed Chair Jerome Powell and ECB Chief Economist Philip Lane deliver keynote addresses at the NABE conference

- On Wednesday, the minutes of the Sept. 15-16 meeting of the FOMC could be especially fruitful for Fed watchers, beginning with details of the debate on conditions necessary to trigger a rate increase

- The U.S. Vice Presidential debate takes place in Salt Lake City on Wednesday

- Although the final formal round of talks is over, the British government expects trade negotiations to continue up to the EU summit in mid-October.

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These are the main moves in markets:

Stocks

- The S&P 500 index climbed 1.8%, to 3,408.56, as of 4:01 p.m. New York time, the highest in a month on the largest increase in almost four weeks.

- The Dow Jones industrial average surged 1.7%, to 28,148.18, the highest in more than a month on the biggest jump in almost 12 weeks.

- The Nasdaq composite index climbed 2.3%, to 11,332.48, the highest in more than a month on the largest increase in almost four weeks.

- The Nasdaq 100 index rose 2.3%, to 11,509.06, the biggest rise in more than a week.

- The Stoxx Europe 600 Index rose 0.8% to 365.63, the highest in more than two weeks, on the largest advance in a week.

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Currencies

- The Bloomberg Dollar Spot index sank 0.4%, to 1,169.13, the lowest in more than two weeks on the biggest dip in more than five weeks.

- The Japanese yen depreciated 0.5%, to 105.77 per dollar, the weakest in more than three weeks on the largest decrease in five weeks.

- The euro climbed 0.6%, to $1.1783, the strongest in more than two weeks.

Bonds

- The yield on 10-year Treasuries climbed seven basis points, to 0.78%, the highest in almost four months on the largest surge in a month.

- The yield on 30-year Treasuries climbed nine basis points, to 1.58%, reaching the highest in almost four months on its sixth straight advance and the biggest surge in a month.

- Germany's 10-year yield increased three basis points, to -0.51%, the highest in more than a week on the largest climb in more than three weeks.

- Britain's 10-year yield rose four basis points, to 0.288%, the highest in almost five weeks.

Commodities

- West Texas Intermediate crude surged 6.2%, to $39.36 a barrel, the largest jump in 20 weeks.

- Gold strengthened 0.6%, to $1,911.48 an ounce, the highest in two weeks.

- Copper declined 0.4%, to $2.97 a pound.