Before The Bell
Wall Street soared higher yesterday, building on Friday’s advance. Traders were injected with a boost of confidence following reports that House Democrats would try to push ahead with a stimulus package, with a vote possibly early next month. Many view this as a key move to keep the U.S. economy on the right track, especially in light of the recent flare-ups of coronavirus cases in several states.
There were no noteworthy developments on the U.S. economic front yesterday. However, China reported that its industrial profits increased by 19% last month, as the nation continues to emerge from the pandemic-driven downturn. This marked the fourth-consecutive monthly advance for the world’s second-largest economy, giving rise to the hope that the U.S. would follow suit.
The Dow Jones Industrials ended the session up 410 points, or 1.5%, fueled by large gains from Boeing (BA) and DOW Inc. (DOW). Meanwhile, the broader S&P 500 moved 53 points higher (1.6%) while the tech-heavy NASDAQ added 204 points (1.9%). However, it was the small-cap stocks that ruled the day, with the Russell 2000 gaining 2.4% on the session. All of the major market sectors posted solid gains, with the biggest advances coming from financials (2.3%), consumer cyclicals (2.2%), and industrials (1.9%). Altogether, advancing issues led decliners by a better than five-to-one margin.
Elsewhere oil prices also moved higher, with light sweet crude up .8%, to about $40.60 a barrel. Although demand appears to have stabilized in recent months, the rise in worldwide COVID-19 cases continues to stoke worries over another dip in the global economy. The commodity is down more than 5% over the past 30 days, and off by nearly 28% versus a year ago. Meanwhile, the European bourses also put in a strong performance. Germany’s DAX led the charge, rising 3.2%, while France’s CAC-40 was up 2.4%, and the U.K. FTSE 100 advanced 1.5%.
As we look to the new day, stocks in Asian markets turned in a mixed performance, and the European bourses are trading down slightly. Meanwhile, U.S. stock futures are suggesting the major indexes will open with modest declines, and crude oil prices have slipped about half a percentage point.
The latest reading on the Case-Shiller U.S. National Home Price Index came out this morning, indicating that home prices were up 4.8% in July, building on the 4.3% increase reported in June. Looking further ahead, Friday brings the latest monthly U.S. jobs report. Consensus expectations call for nonfarm payrolls to have increased about 800,000 in September, down from the 1.3 million gain posted the month before.
– Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
