Wall Street rises on stimulus bets as economic recovery cools
Wall Street’s main indexes rose on the first day of the fourth quarter on Thursday as investors bet in favor of more fiscal stimulus after data showed the pace of a domestic economic rebound was slowing.
Nine of the 11 major S&P sectors were higher, although gains were led by real estate .SPLRCR and utilities .SPLRCU, pointing to a broader risk-off mood.
The consumer discretionary index .SPLRCD, which houses Amazon.com Inc AMZN.O, and the information technology sector .SPLRCT also gained as investors flocked to stocks considered relatively safe during heightened economic uncertainty.
“Markets are fairly optimistic this morning about the potential for that stimulus package,” said Chad Oviatt, director of investment management for Huntington Private Bank in Columbus, Ohio.
“They are looking for a deal to be done (but) the question becomes, is it just posturing or there is actually a deal in the works?”
Aggressive monetary and fiscal stimulus partly powered a Wall Street rebound since a coronavirus-driven crash in March, but the S&P 500 posted monthly declines in September as economic data pointed at a long road to pre-pandemic levels.
Data on Thursday showed weekly jobless claims remained at recession levels, while personal income dropped in August, underscoring the need for another government rescue package for businesses and the unemployed.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin were expected to try again on Thursday to reach a deal on COVID-19 relief legislation. Pelosi said she believed Democratic lawmakers and the White House were close to agreeing on the size of a bill.
Shares of major U.S. airlines .DJUSAR headed higher as White House Press Secretary Kayleigh McEnany said the Trump administration was open to standalone legislation to help the industry ride out the recession.
With the presidential election now less than five weeks away, analysts have warned of higher volatility over the next few weeks.
“Volatility is going to come back in a big way, as opposed to the second quarter, when we were able to just forget everything and pile money into the market,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
At 12:49 p.m. ET, the Dow Jones Industrial Average .DJI was up 0.51%, the S&P 500 .SPX was up 0.62% and the Nasdaq Composite .IXIC was up 1.08%.
Exxon Mobil Corp XOM.N slipped 3.4% after it signaled a bigger-than-expected loss in the third quarter as the U.S. oil major struggles to cope with the effects of a pandemic-driven downturn in the energy industry.