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Market Snapshot: US shares proceed to see modest positive aspects on optimism in regards to the prospect for fiscal stimulus

Stocks held modest gains, building on the previous session's surge, partly due to renewed optimism about the prospect of another round of fiscal stimulus from Congress.

The Dow Jones industrial average
DJIA,
+ 0.13%
rose 39.46 points, or 0.1%, to 28,342.92 while the S&P 500
SPX,
+ 0.49%
gained 17.80 points, or 0.5%, to trade at 3,437.25. The Nasdaq Composite
COMP,
+ 0.46%
rose 48.97 points or 0.4% to 11,413.57.

The Dow ended Wednesday up 530.70 points, or 1.9%, at 28,303.46 while the S&P 500 rose 58.49 points, or 1.7%, to close at 3,419.44. The Nasdaq Composite rose 210 points, or 1.9%, to finish at 11,364.60.

What is driving the market?

U.S. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi resumed talks Wednesday after President Donald Trump tweeted the previous evening that he was open to incremental fiscal stimulus measures, including aid to air workers. Trump had previously announced that he had cut talks with Congress Democrats about another financial aid package to support the economic recovery from the coronavirus pandemic.

On Thursday, Pelosi announced that it would not support a standalone airline aid program without a more comprehensive coronavirus aid package. This is the latest twist in late efforts to provide more economic aid ahead of the elections, the Wall Street Journal reported.

“Stimulus conversations take place one minute, the next. They appear to be back in business and stocks are reacting positively, ”Fawad Razaqzada, a market analyst at ThinkMarkets, said in a note. "But investors will be wondering what might come next and if, given a growing list of concerns, that will be enough to support markets at these elevated levels."

Razaqzada questioned whether the rally in the run-up to the US presidential election on November 3 and the rise in coronavirus cases, including record increases in daily infections in several European countries, is sustained.

Some analysts have argued that optimism is more focused on the potential for a more comprehensive package in January after the elections. Fears of a competitive election that could put the outcome of the competition in doubt for weeks have also subsided, as polls show Democratic challenger Joe Biden has extended his lead over Trump, analysts said.

While a Biden administration would aim to lift Trump's corporate tax cuts and increase regulation in a number of industries, the potential for a lengthy and divisive battle after the elections has been viewed by many investors as a worst-case scenario.

“Our base case is a Biden win and a full Democratic Congress. In this scenario, the Democrats are pursuing a net fiscal stimulus that combines tax increases with a sophisticated spending plan for energy and climate management, ”Credit Suisse analysts write in a note.

A vice presidential debate on Wednesday night was viewed as much more civic than last week's clash between Trump and Biden, but it seemed unlikely that the election momentum would change, analysts said.

In the week ending October 3, initial jobless claims submitted under government programs fell from a revised 849,000 the previous week to 840,000, the Labor Department reported. Economists surveyed by MarketWatch had forecast that the number of new claims would drop to 820,000. The number of Americans claiming unemployment benefits is falling only slowly, suggesting that the labor market may take a hit in the face of another wave of corporate layoffs.

Which companies are in focus?

Shares of International Business Machines Corp.
IBM,
+ 5.48%
rose 6% after the tech company announced it would split its managed infrastructure services unit of Global Technology Services into a new public company.

Morgan Stanley
MS,
+ 0.45%
said Thursday it has agreed to take over asset managers Eaton Vance Corp.
EV,
+ 47.94%
in a cash-and-stock deal valued at approximately $ 7 billion. Eaton Vance stocks rose 48% while Morgan Stanley stocks rose 0.4%.

Regeneron Pharmaceuticals Inc.
REGN,
+ 1.58%
Shares rose more than 2% after Trump praised an experimental antibody cocktail from the company that is still in clinical trials. Trump was given the combination when he was hospitalized for COVID-19.

Shares of McDonald & # 39; s Corp.
MCD,
-0.80%
were down 0.6% after the fast food giant reported third-quarter sales in the same store that beat forecasts and increased its dividend by 3%.

How do other markets act?

The yield on the 10 year Treasury bill
TMUBMUSD10Y,
0.766%
fell 2.5 basis points to 0.763%. Bond yields move inversely with prices.

The Europe-wide Stoxxx 600 Europe Index
SXXP,
+ 0.78%
rose 0.8% while the London FTSE 100
UKX,
+ 0.53%
was up 0.5%.

Gold futures
GOLD,
+ 1.89%
tried a rebound, rising 0.1% while oil futures
CL.1,
+ 2.05%
were compounded by concerns about near-term supply prospects in a widening strike in Norway and when Hurricane Delta halts production in the Gulf of Mexico.

The ICE US dollar index, a measure of the currency versus a basket of six major competitors, rose 0.1%.

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