Before The Bell - Wall Street's resilience continues to be on display. To wit, after a strong push higher on Monday, for most of the day on Tuesday, and again on Wednesday, the Street got some additional wind at its sails yesterday morning, surging by another 150 points in the Dow Jones Industrial Average early in the session. Once more it was optimism on the stimulus front along with some upbeat individual stories that kept the bears in check.
As to specifics, the early buying this week came on optimism that a comprehensive fiscal stimulus deal could be brokered by Congress before the November 3rd election. Then, after the President scuttled such hopes late Tuesday (which set in motion the last hour selloff that day), he reversed gears Tuesday night, by saying he would accept a series of small targeted packages aimed at select industries, such as the airline sector. So, the market surged anew on Wednesday.
There was some carryover early yesterday, as noted, but that optimism eroded by midday as House Speaker Pelosi said she would not agree to any partial arrangements that fell short of a desired level. So stocks briefly pared their gains. Meantime, in addition to this news, there were individual stories that were moving the market. Specifically, shares of Dow component IBM (IBM) jumped on news that the tech giant would be spinning off an old-line business, opting to focus on growth areas instead.
Also, Eaton Vance (EV) noted that it had received a buyout offer from investment banking behemoth Morgan Stanley (MS). Eaton surged on the news, while Morgan Stanley saw its stock ease modestly. In economic data, meanwhile, the Labor Department reported that first time jobless claims had come in at 840,000 for the latest week. That was down slightly from the prior seven days, but was above the forecast of 820,000. This indicator remains stubbornly high.
As for the stock market, the three main large-cap indexes all continued to hold moderate gains as we moved ahead to the mid-afternoon stretch. The indexes then would stay range-bound until just before the close when some further modest buying would ensue. This firming would push the Dow to another triple-digit win, with a closing advance of 122 points. The S&P 500 and the NASDAQ would climb by 27 and 56 points, respectively.
After yesterday's nicely constructive session, the equity futures surged ahead in the after hours last evening as investors continued to hold out hopes for a virus-relief package. Finally, last night's gains are continuing this morning, setting the stage for a positive opening when trading resumes, as the thus far merry month of October looks to continue. – Harvey S. Katz, CFA