U.S. Stocks Open Higher to Start New Quarter
October 01 2020 - 9:02AM
Dow Jones News
By Caitlin Ostroff
U.S. stocks rose in early trading Thursday, following the
S&P 500's best six-month performance since 2009, as central
banks' stimulus measures keep markets buoyant.
The S&P 500 gained 0.8%, indicating that the broad market
gauge could climb on the first day of the fourth quarter. Despite a
decline in September, the benchmark was up about 27% over the two
quarters ended Wednesday. The Dow Jones Industrial Averge opened
176 points, or 0.6%, higher, while the tech-heavy Nasdaq Composite
Index added 1.1%.
Shares of Boeing rose 2.8% after the plane maker got a tentative
personal endorsement for fixes to its beleaguered 737 MAX from the
head of the Federal Aviation Administration. Shares in PepsiCo
gained 0.4% after the drinks and snacks company beat earnings
estimates. Conagra Brands shares rose 2.2% Thursday after its board
raised the quarterly dividend.
Some investors are hopeful that an economic rebound in recent
months will have resulted in corporate earnings that beat
expectations for the third quarter. Appetite for risky assets that
typically generate higher returns -- including stocks -- continue
to be buoyed by the flood of cheap money unleashed by central banks
and governments.
"If you look at the market, it's telling you that we're going to
get a recovery next year. I'm convinced we're in a new bull
market," said Patrick Spencer, managing director at U.S. investment
firm Baird. "Even with the election, behind all that is central
banks and liquidity."
Coronavirus infections are another point of focus. Infection
rates in the U.S. have remained elevated for some months, and
health experts have warned that the colder months may bring a new
wave of cases. While investors don't expect to see a repeat of the
spring's stringent lockdowns, fresh restrictions could threaten
recovery in the labor market and weigh on consumer spending, which
accounts for more than two-thirds of the U.S. economy.
About 837,000 Americans applied for new unemployment benefits
through the week ended Sept. 26, down from 873,000 the week before,
signaling an improving labor market though unemployment remains
high. New figures from the Department of Commerce showed that U.S.
consumers boosted spending by 1% in August from the month
prior.
Investors continue to assess whether Congress will pass another
aid package that would bolster U.S. economic growth ahead of the
elections, though such hopes have largely receded in recent
weeks.
A renewed burst of optimism this week -- prompted by talks
between Republican and Democratic leaders -- began to fade on
Wednesday after the House postponed a vote on a $2.2 trillion
package. Democrats are trying to find common ground with the White
House on a bipartisan agreement, though they remain far apart on
key issues.
"The big wildcard in the U.S. is whether we get more fiscal
spending or not," said Gregory Perdon, co-chief investment officer
at private bank Arbuthnot Latham. "The political backdrop is just
so toxic."
The Institute for Supply Management's September purchasing
managers index for manufacturing, due out at 10 a.m., is likely to
reflect a strong rebound in factory activity amid a slow global
recovery and strong domestic demand for autos, electronics and
other goods.
In bond markets, the yield on the benchmark 10-year Treasury
ticked up to 0.714%, from 0.677% Wednesday.
The ICE U.S. Dollar Index, which measures the greenback against
a basket of currencies, fell 0.2%.
Overseas, the pan-continental Stoxx Europe 600 edged up
0.2%.
Among European equities, shares in Bayer fell almost 10% after
the German chemicals and pharmaceuticals company said the
coronavirus pandemic would hit its crop-science business harder
than anticipated as prices for various crops fell.
STMicroelectronics rose 6.5% in Milan after the chip maker
raised its 2020 revenue outlook following stronger-than-forecast
third-quarter revenue.
In Asia, the Tokyo Stock Exchange halted all stock trading for
Thursday due to a system problem, and said it expects to resume
normal trading Friday. Markets in China, Hong Kong and South Korea
were closed for a holiday.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
October 01, 2020 09:47 ET (13:47 GMT)
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