The market finished higher on Wednesday thanks to rising hopes for another fiscal stimulus bill, while investors also assessed the first U.S. presidential debate.
The Dow Jones Industrial Average was up 1.2%, over 300 points, on Wednesday, while the S&P 500 rose 0.8% and the tech-heavy Nasdaq Composite gained 0.7%.
The market wrapped up a dismal September, with all three major averages posting their first monthly losses since March, when the stock market hit a low point during the coronavirus pandemic.
Market sentiment was lifted after House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin both said that they are “hopeful” about reaching an agreement between Democrats and the White House on the next coronavirus stimulus bill later this week.
“We’re going to give it one more serious try to get this done and I think we’re hopeful that we can get something done,” Mnuchin said at CNBC’s Delivering Alpha conference. “I think there is a reasonable compromise here.”
Stocks also rose after better-than-expected jobs data: 749,000 private-sector jobs were added to the economy in September, more than the 600,000 forecast by Dow Jones economists.
Shares of companies that would benefit from an economic recovery—including airlines, banks and cruise operators—led the market rally on Wednesday.
The stock market cut some of its gains late in the afternoon, however, after Mnuchin and Pelosi were unable to reach a deal on stimulus—but the pair pledged to continue discussions this week.
What To Watch For
Wednesday’s session comes a day after the first U.S. presidential debate between President Donald Trump and Democratic nominee Joe Biden, a tumultuous affair in which both candidates sparred on a number of issues and constantly interrupted each other. Investors are hoping that there will be a clear winner on Election Day rather than a drawn-out electoral process which could hit markets, but the heated debate did little to ease Wall Street concerns about election uncertainty.
In a sense, the vicious debate between Trump and Biden created “even more uncertainty” and short-term volatility for markets, Daniel Deming, managing director at KKM Financial, told CNBC. “It became pretty apparent that this thing is not going to be over on Nov. 3 and I think the market is probably not too crazy about that,” he added.
Stocks snapped a three-day winning streak on Tuesday, as the Dow fell more than 100 points. Those losses came amid a resurgence of coronavirus cases across Europe and the United States. In New York City, the daily positive rate of coronavirus tests nearly tripled to above 3% for the first time in months, Mayor Bill De Blasio said. Prospects for a quick economic recovery have recently dwindled amid uncertainty over fiscal stimulus, a resurgence of coronavirus cases and potentially delayed election results.
Stocks Close A Dismal September As Investors Prepare For An Even Rockier October (Forbes)
A Biden Victory And Split Congress Is Best For Stocks, But Here’s What Would Kill Markets After Election Night (Forbes)
Stimulus Bill Before Election Day? Unlikely, Wall Street Says (Forbes)
Stimulus Update: House Democrats Considering New, Smaller Relief Package (Forbes)
UBS Tells Clients To Prepare For A Contested Election By Buying Gold (Forbes)
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