US stock futures rose slightly in overnight trading as investors braced themselves for the start of the fourth quarter in hopes of fiscal stimulus.
Dow futures rose 115 points. S&P 500 futures and Nasdaq 100 futures rose 0.25% and 0.3%, respectively.
The House of Representatives delayed voting on a $ 2.2 trillion bailout Wednesday night after House Spokeswoman Nancy Pelosi and Treasury Secretary Steven Mnuchin failed to sign a deal on coronavirus relief. However, the couple said the conversation would continue.
The Federal Reserve announced on Wednesday that it would extend restrictions on dividends and buybacks from major banks through the fourth quarter. After the announcement by the central bank, the banks fell into extended trading.
On Wednesday, the Dow Jones Industrial Average jumped more than 300 points after rising more than 550 points in hopes the White House and Senate would approve a second stimulus package.
The S&P 500 also recorded an increase of over 0.8%. The Nasdaq Composite was up 0.75%, helped by gains at Netflix and Microsoft.
Stocks that depend on the economic recovery – such as airlines and cruise lines – lost momentum after the negative headlines. Airlines are on the verge of laying off tens of thousands of employees without further government support.
"Given that lawmakers have made no progress, there is further doubt that an agreement can be reached before the November 3rd election," Susan Schmidt, head of US stocks at Aviva Investors, told CNBC. "Investors are heading into the final quarter of the year and expect volatility to continue. They acknowledge that the winners' non-obsession has been detrimental to their portfolios this year."
Despite the rally on Wednesday, stocks rounded out September, the first month of decline since March.
The Dow Jones Industrial Average lost nearly 2.3% in September, a typically weak month for stocks. The S&P 500 fell 3.9% this month. The technology-intensive Nasdaq Composite fell 5.2% since September 1, hurt by weakness in technology stocks. However, all three major averages posted strong gains in the third quarter.
Investors also digested a combative presidential debate between Donald Trump and Joe Biden on Tuesday evening.
Starwood's Barry Sternlicht said Wednesday the stock market would suffer from democratic momentum.
"Maybe long-term, two or three years after the Democratic sweep would be fine, but in the short-term, with the capital gains tax change, you'd probably see a pretty significant correction in soaring stocks in November when they announce the winner," the chairman said and CEO of Starwood Capital Group at the Delivering Alpha conference presented by CNBC and Institutional Investor.
Conversely, Social Capital founder and CEO Chamath Palihapitiya said the stock market will continue to rise regardless of a Trump or Biden presidency. The downright tech investor said investors need to find growth in the stock market with interest rates close to zero.
Positive news about coroanvirus vaccines also bolstered stocks on Wednesday. Treatment with Regeneron improves symptoms in out-of-hospital patients, and Moderna's vaccine shows signs of work in older adults, according to one study. The Financial Times reported Wednesday that Moderna's vaccine will not be ready before the November election.
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