The market moved sharply higher on Monday, trying to recover from its fourth straight week of losses, as investors cheered progress in negotiations over the next coronavirus stimulus bill.
The Dow Jones Industrial Average was up 1.5%, over 400 points, on Monday, while the S&P 500 rose 1.6% and the tech-heavy Nasdaq Composite gained 1.9%.
With only a few days of trading left in September, all three major averages are still on track to post their first monthly losses since March, when the stock market hit a low point during the coronavirus pandemic.
Big Tech stocks, which have been the main source of the market’s sell-off in September, rebounded on Monday: Shares of Amazon, Apple, Microsoft, Facebook and Google-parent Alphabet all rose.
Bank stocks also led the market higher, with JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley all rising by around 2% or more.
Market sentiment was lifted after House Speaker Nancy Pelosi said on Sunday that a last-minute coronavirus stimulus deal could still happen before the election—and she restarted negotiations with Treasury Secretary Steven Mnuchin on Monday.
Democrats are trying to forge ahead with a revised relief package worth $2.4 trillion and could vote on the bill as soon as next week if an agreement is not reached with Republicans (the GOP has advocated for a bill costing no more than $1.5 trillion).
Shares of companies that would benefit from a reopening of the economy—including airlines and cruise operators—also moved higher on Monday.
“A potential breakthrough in the impasse over COVID-19 related stimulus seems to have lifted markets,” says Jamie Cox, Managing Partner for Harris Financial Group. “Given how far apart the two sides were, markets had all but given up on action prior the election; therefore, those expectations, which had been pricing in over the last week or so, are being unwound a bit today.”
Wall Street is coming off a sharp rally on Friday, in which the Dow rose over 300 points. The major averages are still on track to post steep losses for September, a historically bad month for stocks. While recent economic data has signaled the start of a recovery from the coronavirus recession, prospects for a quick rebound are dwindling amid uncertainty over fiscal stimulus, a resurgence of coronavirus cases and potentially delayed election results.
What To Watch For
Investors continue to remain anxious about a resurgence of coronavirus cases in Europe and the United States. New cases are rising by at least 5% or more in over half of U.S. states, according to a CNBC analysis of Johns Hopkins University data. On Saturday, new daily coronavirus cases topped 1,000 in New York state for the first time since early June. Across the Atlantic, meanwhile, the U.K. recently went back into lockdown, while France and Spain have seen an alarming spike in new infections.
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