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Stocks rose Thursday morning, building on the previous session’s gains which were attributed in part to renewed optimism over prospects for another round of fiscal stimulus from Congress.
Ahead of the bell, futures had lost some ground, however, after first-time weekly jobless claims came in higher than expected.
What are major benchmarks doing?
The Dow Jones Industrial Average DJIA, +0.30% was up 92 points, or 0.3% at 28,396, while the S&P 500 SPX, +0.50% gained 19 points, or 0.5%, to 3,439. The Nasdaq Composite COMP, +0.41% rose 70 points, or 0.6%, to 11,433.
The Dow on Wednesday finished with a gain of 530.70 points, or 1.9%, at 28,303.46, while the S&P 500 advanced 58.49 points, or 1.7%, to close at 3,419.44. The Nasdaq Composite rose 210 points, or 1.9%, finishing at 11,364.60.
What’s driving the market?
Wednesday’s early gains came after President Donald Trump tweeted the previous evening that he was open to piecemeal fiscal stimulus measures, including aid for airline workers. Earlier Trump had announced he had scrapped talks with congressional Democrats over another financial-aid package to help support the economic recovery in the wake of the coronavirus pandemic.
See: Mnuchin and Pelosi resume discussions after Trump changes course on fiscal stimulus
“The overriding expectation by the markets at this point is that some form of stimulus is coming, sooner rather than later, and this is driving a risk-on rally,” said Fiona Cincotta, analyst at City Index, in a note.
Others argued that stimulus-related optimism is centered more on the potential for a more sweeping package in January after the November elections. Also, fears of a contested election, which could leave the outcome of the Nov. 3 contest in doubt for weeks, have faded as polls show Democratic challenger Joe Biden increasing his lead over Trump, analysts said.
While a Biden administration would aim to repeal Trump’s corporate tax cuts and increase regulation across a number of industries, the potential for a drawn-out and divisive postelection fight has been viewed as a worst-case scenario by many investors.
“Our base case is a Biden win and Democrats sweeping Congress. In this scenario, the Democrats pursue a net fiscal stimulus that combines tax hikes with an elaborate spending plan on energy and climate change management,” wrote analysts at Credit Suisse, in a note.
A vice presidential debate Wednesday night was viewed as a much more civil affair than last week’s clash between Trump and Biden, but appeared unlikely to change the election dynamic, analysts said.
Meanwhile, initial jobless claims filed through state programs slid to 840,000 in the week ended Oct. 3 from a revised 849,000 in the prior week, the Labor Department reported. Economists polled by MarketWatch had forecast new claims to fall to 820,000.
Which companies are in focus?
- Shares of International Business Machines Corp. IBM, +7.49% rose more than 8% after the technology company said it would separate its managed infrastructure services unit of its Global Technology Services division into a new public company.
- Morgan Stanley MS, +0.22% said Thursday it has agreed to acquire asset manager Eaton Vance Corp. EV, +47.17% in a cash-and-stock deal with an equity value of about $7 billion. Eaton Vance shares jumped 46%, while Morgan Stanley shares were off 0.8%
- Regeneron Pharmaceuticals Inc. REGN, +1.81% shares were up 1.7% after Trump praised an experimental antibody cocktail made by the company which is still in clinical trials. Trump was administered the combination when he was hospitalized for COVID-19.
- Shares of McDonald’s Corp. MCD, -0.39% were off 0.1% after the fast-food giant reported third-quarter same-store sales that beat forecasts and said it was raising its dividend by 3%.
How are other markets trading?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.775% fell 2.4 basis points to 0.764%.
The pan-European Stoxxx 600 Europe index SXXP, +0.78% rose 0.8%, while London’s FTSE 100 UKX, +0.57% was up 0.7%.
Gold futures GOLD, +1.03% attempted a rebound, rising 0.7%, while oil futures CL.1, +2.82% were boosted by worries over the near-term supplhy outlook amid a widening strike in Norway and as Hurricane Delta closes down production in the Gulf of Mexico.
The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, was up 0.1%.
