Election week remains bullish for stocks
05-Nov-20 16:15 ET
Dow +542.52 at 28390.12, Nasdaq +300.15 at 11890.86, S&P +67.01 at 3510.59
briefing.com
[BRIEFING.COM] The S&P 500 gained 2.0% on Thursday in a continuation of the market's rebound rally this election week. The Nasdaq Composite (+2.6%) and Russell 2000 (+2.8%) outpaced the benchmark index by a comfortable margin while the Dow Jones Industrial Average (+2.0%) finished in-line.
The gains were more broad-based this time around, with value stocks rising alongside growth stocks after a strong open. Each of the 11 S&P 500 sectors started in positive territory, but only the energy sector (-0.04%) finished lower.
The information technology sector rose 3.1%, boosted by its semiconductor components following Qualcomm's (QCOM 145.41, +16.44, +12.8%) strong earnings report and upbeat guidance. The Philadelphia Semiconductor Index climbed 4.4%. The materials sector (+4.1%) was the best-performing sector, though.
Presumably, the market remained pleased by the prospect of a divided Congress, meaning it would be difficult to pass new legislation like higher taxes. Regarding the presidential election, there was still no projected winner, but former Vice President Biden led President Trump 253-214 in the delegate count, according to The New York Times.
In addition, the bullish price action likely exacerbated a fear of missing out on further gains, particularly among investors who sold the market last week. Today's advance increased the S&P 500's weekly gain to 7.4% after falling 5.6% last week.
Separately, there were no surprises in the FOMC policy statement or Fed Chair Powell's press conference. The fed funds rate was left unchanged as widely expected. Mr. Powell said the current pace of asset purchases remained appropriate for the current situation but added that the voting committee discussed options if more accommodation is needed.
Treasury yields were subdued all session following yesterday's rally in longer-dated tenors, which was another supporting factor for growth stocks. The 2-yr yield was unchanged at 0.15%, and the 10-yr yield increased one basis point to 0.78%.
The U.S. Dollar Index fell 0.9% to 92.58, which aided gold futures ($1946.90, +51.90, +2.7%) but not crude futures ($38.75, -0.41, -1.1%).
Reviewing Thursday's economic data, which featured the weekly Initial and Continuing Claims report:
- Initial jobless claims decreased by 7,000 for the week ending October 31 to 751,000 (Briefing.com consensus 735,000). Continuing claims for the week ending October 24 decreased by 538,000 to 7.285 million.
- The key takeaway from the report is that initial jobless claims continue to run at very high levels that connote ongoing, and difficult, challenges for the labor market's recovery path.
- Productivity in the third quarter increased at a seasonally adjusted annual rate of 4.9% (Briefing.com consensus 4.0%) on top of an upwardly revised 10.6% increase (from 10.1%) in the second quarter. Unit labor costs decreased 8.9% (Briefing.com consensus -9.6%) following a downwardly revised 8.5% increase (from 9.0%) in the second quarter.
- The key takeaway from the report is that it reflects the strong rebound in the third quarter, as the economy rebounded from the depths of the pandemic-related shutdown.
Looking ahead, investors will receive the Employment Situation Report for October, Consumer Credit for September, and Wholesale Inventories for September on Friday.
- Nasdaq Composite +32.5% YTD
- S&P 500 +8.7% YTD
- Dow Jones Industrial Average -0.5% YTD
- Russell 2000 -0.5% YTD
Market Snapshot
| Dow | 28390.12 | +542.52 | (1.95%) | | Nasdaq | 11890.86 | +300.15 | (2.59%) | | SP 500 | 3510.59 | +67.01 | (1.95%) | | 10-yr Note | 0/32 | 0.774 |
|
| | NYSE | Adv 2418 | Dec 593 | Vol 927.8 mln | | Nasdaq | Adv 2618 | Dec 795 | Vol 3.8 bln |
Industry Watch
| Strong: Materials, Information Technology, Industrials, Financials |
| | Weak: Energy, Real Estate, Health Care |
Moving the Market
-- Stocks bolstered weekly gains in mostly broad-based advance
-- Lingering optimism about possibility of divided Congress
-- FOMC kept rates unchanged as expected; pace of asset purchases unchanged
-- Fear of missing out on further gains
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WTI crude settles lower despite weaker dollar
05-Nov-20 15:30 ET
Dow +564.29 at 28411.89, Nasdaq +310.29 at 11901.00, S&P +74.56 at 3518.14
[BRIEFING.COM] The S&P 500 is up 2.2% following Fed Chair Powell's press conference, which did not yield any surprises. Market reaction was muted.
One last sector update shows materials (+4.6%), information technology (+3.1%), and financials (+2.7%) leading with solid gains, while the energy (+0.7%) and real estate (+0.7%) sectors trail with more modest gains.
WTI crude futures settled lower by 1.1%, or $0.41, to $38.75/bbl. The decline came despite a weaker dollar (92.58, -0.82, -0.9%). |
