Stocks wobbled in afternoon trade Monday following the worst week on Wall Street in seven months, helped by encouraging economic data even as a new lockdown in Europe was announced.
European stocks shook off early losses to rise following better-than-forecast results from the eurozone manufacturing PMI. The Stoxx Europe 600 rose 1.6%.
U.K. Prime Minister Boris Johnson on Saturday became the latest leader to announce a lockdown, with restrictions due to hit England on Thursday. Companies including Associated British Foods, which owns clothing retailer Primark, and betting shop operator GVC Holdings detailed how hard the lockdown would hit their financial results.
The main item for traders, though, is the U.S. election on Tuesday.
Former Vice President Joe Biden has a 10-point national lead and 6-point advantage in battleground states, according to a Wall Street Journal/NBC News poll. Other polls generally were positive for the Democratic challenger—including a new one Monday from Morning Consult—with the exception of an Iowa poll showing President Donald Trump with a 7-point advantage after being tied in the Hawkeye state last month.
Trump said his lawyers “were going in” to contest ballots counted after election night in critical states such as Nevada and Pennsylvania.
Analysts at BCA Research said a combination of a Biden victory with Republicans maintaining control of the U.S. Senate would be deflationary.
“While 72% of electoral outcomes are reflationary, the 28% odds of a deflationary outcome are too elevated to ignore when the pandemic is reaccelerating and when the stock market is as expensive as it currently is. Moreover, the high likelihood that the full tally of the votes will not be completed by Tuesday night will add to the uncertainty,” the analysts said.
Investors are also watching the usual flow of deals and economic news in a week that will include a Federal Reserve meeting and figures on U.S. employment in October.
Among individual stocks, Wingstop (ticker: WING) shares slid 0.8% after reporting strong earnings for its fiscal third quarter and announcing a special dividend of $5 per share. The chicken-wing chain saw a 25.4% increase in domestic same-store sales.
Clorox (CLX) shares climbed 3.8% after the company reported fiscal first- quarter results that beat estimates on the top and bottom line as businesses and households continue to buy cleaning products.
Estee Lauder (EL) shares advanced 1.2% after its fiscal first-quarter results topped analysts’ estimates. The cosmetics company said sales in skin-care products offset weaknesses in makeup.
Dunkin’ Brands Group (DNKN) shares were up 6.3% after the company agreed to be taken private by Arby’s owner Inspire Brands in a $11.3 billion deal.
Under Armour (UAA) shares climbed 4.3% following an upgrade by analysts at Stifel.