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Wall Street claws back more of its losses on stimulus hopes
NEW YORK (AP) — Stocks are rising Monday, as hopes for economic aid from Washington help Wall Street shake off its initial reaction to sell after President Donald Trump tested positive for the coronavirus.
The S&P 500 was 1.4% higher in late morning trading on solid gains from technology, health care and financial companies. The gains were also broad, with 10 of 11 sectors in the index rising.
Treasury yields, stocks overseas and oil were all climbing after Trump and House Speaker Nancy Pelosi both noted the importance over the weekend of additional support for the economy. Trump’s doctors also said he may leave the hospital soon, though his condition remains clouded in uncertainty.
The Dow Jones Industrial Average was up 378 points, or 1.4%, at 28,063 as of 11:29 a.m. Eastern time, and the Nasdaq composite was 1.7% higher. The lift follows through on a comeback that helped markets cut their losses on Friday, after Trump’s condition became publicized.
Stocks initially tumbled Friday as the jolt of uncertainty raised concerns that a White House victory for Democrat Joe Biden would mean higher taxes and tighter regulations for companies, which could drag down their profits. But analysts said a Democratic sweep of the election could also raise the probability of a big government support plan for the economy, something that investors have been clamoring for since jobless benefits and other stimulus Congress approved in March expired.
The market’s moves on Monday morning and late Friday suggest investors are anticipating either a large stimulus effort or the increased likelihood of a “blue wave,” said Yousef Abbasi’s, global market strategist at StoneX.
Stocks got an immediate lift Friday afternoon after Pelosi told airline executives to stop the furloughs of tens of thousands of workers because aid for the industry was “imminent,” either as a stand-alone effort or as part of a wider rescue package.
A stand-alone bill for airlines failed to advance in the House on Friday, but hopes remain for a larger effort.
Over the weekend, Trump tweeted from the hospital that the country wants and needs more economic stimulus. “Work together and get it done,” he said on Saturday.
A day later, Pelosi said that the two sides are making progress, but they still haven’t reached a breakthrough. “It just depends on if they understand what we have to do to crush the virus,” she said in an interview on CBS.
A report on Monday said growth for the nation’s services industries last month was stronger than economists expected. It’s an encouraging piece of data, but it follows a string of mixed reports that have shown some areas of the economy slowing since Congress’ last round of aid expired.
Shares of Regeneron rose 6% after Trump received an experimental drug from the company that supplies antibodies to help the immune system fight the virus.
Trump on Friday also began a five-day course of remdesivir, a Gilead Sciences drug currently used for moderately and severely ill patients. The drugs work in different ways — the antibodies help the immune system rid the body of virus, and remdesivir curbs the virus’ ability to multiply.
Gilead rose 2.9%.
Trump briefly ventured out in a motorcade on Sunday to wave to cheering supporters. His medical team reported that his blood oxygen level dropped twice, and that they gave him a steroid typically only recommended for the very sick. They also said his health is improving and that he might be discharged as soon as Monday.
MyoKardia, a biopharmaceutical company, surged 58% after Bristol Myers Squibb said it would buy the 8-year-old company for $13.1 billion, or $225 per share in cash.
On the losing side was DraftKings, which fell 6.7% . It and some of its existing investors are selling 32 million shares of the company’s stock after it nearly sextupled in 2020.
In Asian trading, Japan’s Nikkei 225 gained 1.2%, South Korea’s Kospi jumped 1.3% and Hong Kong’s Hang Seng rose 1.3%.
Fujitsu President Takahito Tokita apologized Monday for the breakdown last week in the Tokyo Stock Exchange’s trading system, which the Japanese company had developed. Speaking during an online webinar, he promised to work with the exchange to prevent a recurrence of the malfunction in Fujitsu’s Arrowhead system, which caused all trading to be halted in Tokyo on Oct. 1.
By Friday, trading resumed after the problem was fixed.
In Europe, Germany’s DAX returned 1.1%, and France’s CAC 40 rose 1%. The FTSE 100 in London added 0.7%.
The yield on the 10-year Treasury rose to 0.75% from 0.70% late Friday.
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