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Stock Market News for Oct 1, 2020

Zacks Equity Research
·5 mins read

Wall Street closed higher on Wednesday on the back of a second round of fiscal stimulus hope. Moreover, several better-than-expected economic data also boosted investors' confidence. All the three major stock indexes ended in the green. However, for the month, these indexes finished in negative territory while for the third quarter, indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) surged 1.2% or 329.04 points to close at 27,781.70, reversing previous day's loss. Notably, 28 components of the 30-stock index ended in the green while 2 finished in red. The blue-chip index is 2.7% below to become green year to date.

Moreover, the tech-laden Nasdaq Composite finished at 11,167.51, gaining 0.7% due to the strong performance by large-cap stocks, terminating previous day's loss.

Meanwhile, the S&P 500 rose 0.8% to end at 3,363.00, reversing previous day's loss. The Financials Select Sector SPDR (XLF) and the Health Care Select Sector SPDR (XLV) advanced 1.4% and 1.6%, respectively. Notably, nine out of eleven sectors of the benchmark index closed in positive zone and two in the red.

The fear-gauge CBOE Volatility Index (VIX) was up 0.4% to 26.37. A total of 10.38 billion shares were traded on Wednesday, higher than the last 20-session average of 10.07 billion. Advancers outnumbered decliners on the NYSE by a 1.20-to-1 ratio. On Nasdaq, a 1.06-to-1 ratio favored advancing issues.

Renewed Negotiations on Fresh Stimulus

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin met for the first time since August to negotiate about the size of the new fiscal stimulus. However, the 90-minute long meeting failed to achieve a decisive conclusion. Meanwhile, the Democrats have reduced the deal size to $2.2 trillion from $3.4 trillion demanded earlier while the Republicans have raised the deal size to $1.5 trillion from $1 trillion offered earlier.

The House speaker said she and Mnuchin had an “extensive conversation” and “found areas where we are seeking further clarification.” Mnuchin said that he is hopeful for a deal anytime soon although disputes over state and local government aid and liability protections for businesses needs to resolve.

Consequently, stocks sensitive to the economic recovery, including banks and cruise operators performed strongly. Shares of The Goldman Sachs Group Inc. GS, Citigroup Inc. C and Norwegian Cruise Line Holdings Ltd. NCLH surged 2.1%, 1.6% and 3.4%, respectively. The Goldman Sachs carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The Department of Commerce reported that the U.S. economy plunged 31.4% in the second quarter of 2020. This was the third and final estimate of the second quarter GDP. The first estimate was a decline of 32.9% and the second estimate was a drop of 31.7%. Decline in consumer spending was revised to 33.2% from 34.1% reported earlier.

ADP/Moody's Analytics reported that the U.S. private sectors added 749,000 jobs in September. Data for August was revised upward from 428,000 to 481,000. Trade, transportation and utilities and manufacturing are the two main recruiters with 186,000 and 130,000 jobs, respectively. Large-sized, mid-sized and small-sized businesses added 297,000, 260,000 and 192,000 jobs respectively.

The National Association of Realtors reported that pending home sales increased 8.8% in August compared with 5.9% in July.

Monthly Roundup

Wall Street had a disappointing September this year. All the three major stock indexes - the Dow, the S&P 500 and the Nasdaq Composite - tumbled 2.3%, 3.9% and 5.2%, respectively, marking their first monthly decline since March. Moreover, all three indexes recorded worst September since 2011.

A spike in coronavirus news cases in several countries of Europe and some states in the United States, conflicting news on the availability of COVID-19 vaccine, uncertainty regarding the fresh round of fiscal stimulus from the U.S. government, intensifying geo-political conflict with China and the upcoming U.S. Presidential election are the reasons for market volatility.

Quarterly Roundup

The third quarter of 2020 was very impressive for Wall Street. The Dow, the S&P 500 and the Nasdaq Composite - surged 7.6%, 8.5% and 11%, respectively. The Dow and the S&P 500 recorded six positive quarters in seven. The Nasdaq Composite posted third positive quarter in fourth. All the three indexes gained significantly in July and August but tumbled in September.

Stocks That Have Made Headlines

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Click to get this free report The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report Citigroup Inc. (C) : Free Stock Analysis Report ETRADE Financial Corporation (ETFC) : Free Stock Analysis Report Morgan Stanley (MS) : Free Stock Analysis Report Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research