Market Perspective for October 6, 2020

This week in the markets kicked off with a positive start as stocks recovered and posted gains following Friday’s brief decline. In fact, the markets opened for the week by closing Monday with their strongest gains of the last several weeks. The major stock indexes all showed impressive gains.

The Dow gained 1.68 percent, adding 565 points. This was the top-performing day for the Dow so far since July 14, 2020. The Nasdaq rose 2.32 percent, the best performance day for the index since September 9, 2020. The S&P 500 added 1.80 percent.

The Russell 2000 jumped 2.77 percent with an additional of 42.67 points. For those skeptical of the recent market gains in major stocks, the significant rally posted by the Russell 2000 at the conclusion of Monday’s trading should assuage any concerns that the market recovery was limited to the highest-valued stocks. Market analysts have expressed optimism that the bold gains in the Russell 2000 at the beginning of this week are indicative of broader sustainable recovery for the markets.

The rally of the markets to open the trading week was bolstered by the plan to discharge the president from Walter Reed Medical Center. In particular, positive developments surrounding this situation led to a 7 percent gain in shares of Regeneron Pharmaceuticals (REGN) following news that the president received an experimental antibody treatment from this company.

The September service PMI came in stronger than expected at 57.8 versus the 56.3 forecast. Optimism among businesses remains high and rising. New orders and employment sub-indexes advanced strongly.

The minutes from the last FOMC meeting will be released on Wednesday.

Investors remain hopeful overall on the potential for lawmakers’ progress towards reaching a final deal on stimulus negotiations before the upcoming presidential election. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi are scheduled to resume negotiation talks on Tuesday. Any agreement could further propel stocks over the coming weeks.

The 10-year Treasury yield jumped to 0.76 percent on Monday, the highest level since June. Rising interest rates pushed up bank shares. SPDR S&P Bank (KRE) popped 3.60 percent.

Earnings season is underway with a handful of companies reporting this week: Paychex (PAYX), Delta Air Lines (DAL), Carnival (CCL), RMP International (RPM) and Domino’s (DPZ)

 

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