Stocks jump on optimism of economic stimulus
Stocks climbed to a more-than-one-month high on renewed optimism that U.S. lawmakers could still reach an agreement on additional stimulus. Treasuries and the dollar fell.
The S&P 500 rose as much as 1.9% after a barrage of overnight tweets from President Donald Trump advocating a piecemeal approach. Trump sent stocks tumbling late Tuesday by ending talks with Democrats. House Speaker Nancy Pelosi, D-Calif., signaled openness to a standalone airline relief bill in a conversation with Treasury Secretary Steven Mnuchin on Wednesday.
"The seesaw we've seen since yesterday's plunge is just case and point for the volatility we may encounter as we close in on the election," said Chris Larkin, managing director of trading and investment product at E-Trade Financial. "That said, with President Trump's call for aid to airlines, an obviously hard-hit area of the market, traders may be eyeing bullish opportunities."
Some investors who've watched Democratic challenger Joe Biden's lead in the polls swell in recent days are now speculating that a victory by him would bring an increase of federal spending to boost the economy. Biden leads among likely voters Florida, Iowa and Pennsylvania, Quinnipiac University polls found. Tech stocks also mostly rose, even after a House panel's proposal late Tuesday for stricter antitrust rules to curb the power of Amazon, Apple, Facebook and Google. The four tech giants account for more than 15% of the S&P 500. Eli Lilly & Co. gained after advances on its covid-19 antibody drug.
"People are now talking again about this blue wave," or election sweep by Democrats in Congress and the presidency, said Marc Odo, client portfolio manager at Swan Global Investments. "The one thing we do need is a very clear cut result coming out of this election."
Minutes of the Federal Open Market Committee's Sept. 15-16 meeting released Wednesday showed some U.S. central bankers sought further debate on the future of the Federal Reserve's asset purchase program when they met last month, signaling they'd be open to altering or increasing bond buying.
With Trump now out of the hospital, investors continue to monitor the virus's impact on economic recoveries around the world. Signs are mounting that the virus is returning to the New York area, with infection rates reaching three-month highs.
"There is going to be heightened volatility," said Bryce Doty, senior portfolio manager at Sit Investment Associates. "You have an extraordinary amount of uncertainty between timing of vaccine, when will this current uptick in cases top out."
Oil fell after U.S. government data showed crude stockpiles increased and gold advanced.
The European Commission, meanwhile, is close to a deal to procure more of the coronavirus treatment remdesivir from Gilead Sciences.
