Stocks climb to five-week highs; bonds gain
U.S. stocks rose to almost five-week highs as traders speculated that lawmakers will eventually provide more stimulus and corporate deal activity increased. Treasury bond yields dropped and the dollar weakened.
The S&P 500 finished up 0.8% after conflicting comments from President Donald Trump and House Speaker Nancy Pelosi, D-Calif., whipsawed equity markets earlier in the day. Energy, utilities and financials were the biggest gainers in the benchmark index, with crude oil rallying as Hurricane Delta approached the already battered Louisiana coast.
"It's likely that there will continue to be near-term volatility due to the back-and-forth over a deal," UBS Global Wealth Management strategists led by Mark Haefele wrote in a note. "A stimulus deal will be struck eventually, central banks will continue to stay supportive, and medical developments still have scope to surprise, in our view."
Eaton Vance leaped after the investment firm agreed to be taken over by Morgan Stanley. IBM surged after saying it will spin off its infrastructure unit. Regeneron Pharmaceuticals rose after Trump said its antibody cocktail was the "key" to his quick recovery. The president said he would authorize its emergency use.
Bulls are now back in control of a market that's increasingly betting that a Joe Biden presidential victory and gains by Democrats in Congress will be good for equities. The scenario seems to be somewhat quelling volatility even as risks from a split in government to a resurgence of coronavirus cases threaten the economic rebound.
"At this point the market is likely projecting a Biden victory," said Bill Fitzpatrick, managing director at Logan Capital Management. "It's a scenario worth considering that we don't get results for a month or so after the election, that's a real possibility."
Meanwhile, Pelosi said there won't be a standalone bill on airlines without a guarantee the other stimulus items are going to be addressed. Trump had earlier touted progress in talks even though there was no sign the two sides are any closer on a deal.
Elsewhere in markets, airlines led European shares higher, helped by as optimism over a covid-19 treatment. U.K. jet engine-maker Rolls-Royce Holdings posted its best five-day performance on record, after shoring up its finances.
Oil futures rose 3.1% after Gulf of Mexico producers shut in 1.7 million barrels a day of crude production ahead of the storm that's expected to slam into the Louisiana coast on Friday. Gold increased for a second day.
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These are some of the main moves in markets:
- The S&P 500 index increased 0.8%, to 3,446.85 as of 4:01 p.m. New York time, the highest in almost five weeks.
- The Dow Jones industrial average rose 0.4%, to 28,425.71, the highest in five weeks.
- The Nasdaq composite index climbed 0.4%, to 11,420.98, the highest in almost five weeks.
- The Nasdaq 100 index rose 0.4%, to 11,550.94.
- The Stoxx Europe 600 index jumped 0.8%, to 368.31, the highest in almost three weeks.
- The Bloomberg Dollar Spot Index decreased 0.2%, to 1,170.35.
- The euro was little changed at $1.176.
- The Japanese yen was little changed at 106 per dollar, the weakest in almost four weeks.
- The yield on 10-year Treasuries fell two basis points, to 0.76%.
- The yield on 30-year Treasuries decreased two basis points, to 1.56%.
- Germany's 10-year yield fell three basis points, to -0.52%, the largest drop in more than two weeks.
- Britain's 10-year yield declined one basis point, to 0.289%, the biggest fall in more than a week.
- West Texas Intermediate crude climbed 3.2%, to $41.26 a barrel, the highest in almost three weeks.
- Gold strengthened 0.3%, to $1,894.64 an ounce.
- Copper gained 0.2%, to $3.04 a pound, the highest in more than two weeks.