U.S. stocks rose, clawing back most of the decline triggered by Donald Trump’s suspension of stimulus talks, after the president backed a piecemeal approach to aid and investors took a longer-term view on a spending program. Treasuries and the dollar fell.
The S&P 500 rose more than 1 per cent after a barrage of overnight tweets from the president supporting $1,200 stimulus checks, $25 billion to hard-hit airlines and $135 billion for small businesses. The benchmark slumped 1.4 per cent Tuesday when Trump abruptly called off aid talks with Democrats. Stocks had climbed earlier in the day on signs a deal was still possible before the election.
“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.”
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. Tech stocks also mostly rose in early trading, even after a House panel’s proposal late Tuesday for stricter antitrust rules to curb the power of Apple Inc., Alphabet Inc., Facebook Inc. and Amazon.com Inc. The four tech giants account for more than 15 per cent of the S&P 500. Eli Lilly and Co. rose 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.”
Volatility picked up this month after Trump contracted the coronavirus and investors were whipsawed by the ups and down of talks on U.S. economic aid.
“These tweets appear to have arrested the risk-off move,” analysts including Lyn Graham-Taylor at Rabobank in London wrote in an investor note “However, it seems a stretch to think that the Democrats would be fans of signing any standalone stimulus measures as, heading into the election, it would erode one of the differentiating factors between them and the Republicans.”
The dollar edged lower versus a basket of its peers before Federal Reserve officials comment later on Wednesday and release minutes from their past policy meeting. Oil fell and gold advanced.
Meanwhile, with Trump now out of the hospital, investors continue to monitor the virus’s impact on economic recoveries around the world. Signs are mounting the virus is returning to the New York area, with infections reaching three-month highs.
The European Commission, meantime, is close to a deal to procure more of the COVID-19 treatment remdesivir from Gilead Sciences Inc.
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Elsewhere, Gazprom PJSC’s shares fell after it was hit with a 29 billion zloty ($7.6 billion) fine from Poland’s antitrust watchdog, which said its proposed Nord Stream 2 gas pipeline impedes competition on European Union energy markets.
These are some of the main moves in markets:
Stocks
The S&P 500 Index increased 1.3 per cent to 3,405.98 as of 10:54 a.m. New York time.
The Dow Jones Industrial Average jumped 1.6 per cent to 28,214.88, the highest in almost five weeks.
The Nasdaq Composite Index climbed 1.3 per cent to 11,294.06.
The Nasdaq 100 Index rose 1.2 per cent to 11,423.86.
The Stoxx Europe 600 Index fell 0.2 per cent to 365.25, the first retreat in a week and the largest fall in more than a week.
Currencies
The Bloomberg Dollar Spot Index fell 0.1 per cent to 1,172.50.
The euro rose 0.3 per cent to $1.1765.
The Japanese yen depreciated 0.4 per cent to 106.01 per dollar, the weakest in almost four weeks.
Bonds
The yield on 10-year Treasuries increased four basis points to 0.78 per cent.
The yield on 30-year Treasuries climbed four basis points to 1.58 per cent.
Germany’s 10-year yield gained two basis points to -0.49 per cent, the highest in almost three weeks.
Britain’s 10-year yield rose two basis points to 0.305 per cent, the highest in more than five weeks.
Commodities
West Texas Intermediate crude decreased 3.2 per cent to $39.36 a barrel.
Gold strengthened 0.3 per cent to $1,883.99 an ounce.
Copper rose 2.6 per cent to $3.04 a pound, the highest in more than two weeks.
