US stocks rose on Monday, extending last week’s gains as investors look to a week that could start a shift in corporate earnings.
The S&P 500 rose 0.9% in morning trade, buoyed by gains in technology stocks. The Nasdaq Composite Index jumped 1.6%. The Dow Jones Industrial Average added 0.4%, or about 115 points.
Early gains are on the way to extend last week’s rally, as the benchmark S&P 500 index advanced 3.8%, its largest weekly gain in three months. Some investors said part of the rally was signals that the presidential election in November could have a more decisive result than originally expected. Opinion polls showed former Vice President Joe Biden an increasing lead over President Trump.
This week, traders’ focus is likely to shift to the third-quarter earnings season. Investors are betting that the results will show that companies’ performance has reversed, helping to lift stocks higher. As the economy slowly reopened, so did the profits for the big S&P 500 companies It is now expected to be down 20% on the previous year, An improvement from the 25% drop expected at the end of June.
“There is a great sense of that [the third quarter] “It was a big quarter for growth in the US,” said Kit Juckes, macro strategist at Société Générale. “Economically, it’s not as bad as our worst nightmare.”
Jim Silinsky, global head of fixed income at Janus Henderson, said earnings will continue to recover but the pace of improvement will slow.
He said, “Many companies almost closed their doors in the second quarter, so simply re-opening, especially in commodity-producing companies, could lead to a somewhat sudden improvement.” However, “with the increase in closures or near-closings, the pace of this should slow down.”
Markets are also betting that the Democrats may secure control of the Senate in the November election, making it a complete sweep. This would pave the way for a massive stimulus package approved by Congress, providing additional relief to families and businesses, in the first months of next year.
“There’s a good chance we over-volatility because of the November election,” said Edmund Ching, global head of equity derivatives strategy at Inc.
He said the Fed was still “in” whatever it takes “mode, and both major parties are committed to more stimulus, although a bipartisan deal is highly unlikely.
The latest White House bid for a new coronavirus package Struck resistance from both Democrats and Republicans Over the weekend, hopes for a deal before November 3 were dashed. But investors have already written off their hopes of a deal before the election, and are looking forward to the new year.
Ching said there were few incentives for lawmakers to reach an agreement before the election. This is partly because there will inevitably be a large gap between actual spending and growth, which is expected to start in earnest only towards the end of 2021.
“The greatest potential for increased stimulus comes with a clean sweep. We have already seen the numbers of Democrats much higher,” said Mr. Silinsky.
Silinsky said a decisive democratic victory is likely to increase the scope and focus of potential financial injections. “What is the Democrats’ package attempt, ”he said,“ It’s reallocation of income away from companies and more toward the general public, particularly the lower-income groups of the general public, ”who have a higher propensity to spend.
Soon after the opening bell, he shares
It jumped 4.2 percent after the cloud carrier said it would buy data platform company Segment in a $ 3.2 billion equity deal expected to close in the fourth quarter.
Technology stocks also posted big gains.
It jumped 4.9% and Apple added 3.6%.
In commodities, Brent crude, the international oil benchmark, fell 1.4% to $ 42.26 a barrel.
Treasurys of America closed for Columbus Day.
Abroad, the Stoxx Europe 600 rose 0.6%. The Chinese Shanghai Composite closed up 2.6% and the Hang Seng in Hong Kong advanced 2.2%.
Caitlin McCabe and Joe Wallace contributed to this article.
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