S&P, Dow Industrials Climb as Election Looms

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By Jem Bartholomew and Frances Yoon 

Major U.S. stock indexes jumped Monday ahead of an election that will shape the government’s response to the coronavirus pandemic and economic downturn.

The Dow Jones Industrial Average gained 503 points, or 1.9%, in morning trading, rebounding after its worst week since March.

The S&P 500 rose 1.6%, while the technology-heavy Nasdaq Composite advanced 1.2%.

Some investors appeared to believe the market was oversold after last week’s rout, boosting equities on Monday.

“We could see some buying back, with some investors seeing this as a buying opportunity given the huge sell off that we had last week,” said Sean Markowicz, strategist at Schroder Investment Management.

Former Vice President Joe Biden is leading President Trump by 10 percentage points among voters nationally in the final days of the election campaign, according to a new Wall Street Journal/NBC News poll. Investors have been hoping for a definitive result in the presidential race, helping avoid a contested outcome, and clear control of the Senate and House by the same major party. That would lead to more clarity on additional stimulus packages and new legislation on health care and taxes.

New data showed U.S. factory activity expanded at a fast clip in October. The Institute for Supply Management said its purchasing-managers index came in at 59.3 last month, beating expectations from economists polled by The Wall Street Journal, who predicted it to be 56.0. Strong demand for consumer goods and capital equipment has driven a manufacturing rebound after coronavirus-related disruptions depressed output this spring.

Overseas, new lockdown measures introduced in the U.K., France, Germany, Ireland, Austria and Belgium to contain the pandemic have been less restrictive than some investors expected, and for a shorter duration. Schools by and large remain open, and governments have expressed hope the new restrictions will be lifted within weeks.

“They are definitely what I’d call lockdown light: not as stringent as what we saw in the first wave,” said Justin Onuekwusi, fund manager and head of retail multiasset funds at Legal & General Investment Management. “That has to be a positive for the economy and markets overall.”

All 11 sectors of the S&P 500 were in positive territory, with materials and industrial stocks among the strongest performers.

Shares of Clorox gained 6% after posting sales that beat analysts’ expectations during the recent quarter.

Estee Lauder Cos. shares climbed 4% after quarterly profit and sales came in above Wall Street’s forecasts.

Shares of Dunkin’ Brands rallied 6.3%. Inspire Brands, the owner of Arby’s, said at the end of last week that it would acquire Dunkin’ for $8.8 billion in one of the largest restaurant deals in years.

More companies are set to report earnings today after the market closes, include PayPal Holdings and Mondelez International.

In bond markets, the yield on the 10-year Treasury edged down to 0.843%, from 0.858% on Friday.

In Europe, the pan-continental Stoxx Europe 600 was up 1.6%, led by stocks in Germany and France. The gauge and the Euro Stoxx 50 failed to show prices for about an hour after markets opened Monday due to issues with index calculation, according to operator Deutsche Börse Group, in the latest technical snafu to hit European markets.

Investors are operating on the assurance that governments are prepared to pump stimulus into the economy, said Alan Custis, managing director of Lazard Asset Management. There is also a better understanding of how to cope with the coronavirus, and markets know which companies are likely to perform better or worse under lockdown restrictions, he said.

In Asia, Japan’s benchmark Nikkei 225 added 1.4%, while Hong Kong’s Hang Seng rose 1.5%.

“Investors are viewing Asia as a safe haven ahead of a good probability that we could see a contested election,” said David Chao, Invesco’s global market strategist for Asia-Pacific excluding Japan.

Oil prices stabilized. Futures on Brent crude, the global oil benchmark, gained 0.7% to $38.21 a barrel. Last week the gauge fell more than 10%, logging its worst week since April, on concerns that renewed coronavirus restrictions would sap energy demand.

Write to Frances Yoon at frances.yoon@wsj.com

 

(END) Dow Jones Newswires

November 02, 2020 10:49 ET (15:49 GMT)

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