Wall Street was rallying overnight with rising hope that Washington may break through its partisanship to deliver more aid for the world’s largest economy.
The S&P 500 was up 1.6 per cent in afternoon trading on Wednesday local time, though it’s still on pace to close out its first monthly loss since March. After setting a record high on September 2, the benchmark index has been mostly tumbling on a wide range of worries in its sharpest setback since it began soaring in the spring.
The Dow Jones Industrial Average was up 527 points, or 1.9 per cent, at 27,980, as of 2:07 pm Eastern time, and the Nasdaq composite was 1.6 per cent higher. The upswing on Wall Street suggested a positive start to trading on the Australian market on Thursday morning, with ASX futures up 23 points at 5825 as of 5:45 am in Sydney.
In the US, Stock futures and Treasury yields perked up following a stronger-than-expected report on hiring by private employers, which was released before stock trading began on Wall Street. They then accelerated amid revived hopes that the US government could soon offer more support for the economy. Treasury Secretary Steven Mnuchin said at a conference presented by CNBC and Institutional Investor that he will talk with House Speaker Nancy Pelosi again in the afternoon, “and I hope we can get something done.”
Investors have been frustrated waiting for Congress to deliver more stimulus after weekly unemployment benefits and other aid it had earlier approved for the economy expired. They have long called such programs crucial for an economy that’s struggling under the weight of the coronavirus pandemic.
“It has certainly weighed on the markets,” said J.J. Kinahan, chief strategist with TD Ameritrade. “This gives us something a little more concrete to hold on to.”
The number of layoffs sweeping the country has remained stubbornly high. The latest high-profile example was the Walt Disney Co., which said late Tuesday it plans to lay off 28,000 workers because of government restrictions due to the pandemic that are hurting its theme parks. Other areas of the economy have also seen growth slow since the Congressional aid went away.
“We all knew that the small businessman or restaurant owner was getting hurt, but this takes it to a different level of just how serious it is,” Kinahan said. “It maybe changes the narrative a bit.”
But a report from payroll processor ADP on Wednesday gave some encouragement. It said hiring by private employers accelerated in September, with 749,000 jobs added versus economists’ expectations for 605,000.
That raises hopes for the federal government’s more comprehensive jobs report, which arrives on Friday. For that, economists had been expecting to see hiring slowed to 850,000 from 1.4 million in August.
This month’s jobs report will take on even more importance than usual because it will be the final one released before Election Day in November.
Tuesday night’s debate between President Donald Trump and the Democratic nominee, Joe Biden, was the first of this election season, and it amplified some of the market’s concerns. Trump said it may take months to learn the election’s results, and such a long period of uncertainty could make an already shaky market even more volatile.
But several analysts said they didn’t see the debate having a big effect on the stock market, whose path depends much more on what happens with corporate profits, interest rates and the coronavirus pandemic than who sits in the White House.
“Last night was pretty much a nothingburger from a market perspective, other than perhaps suggesting more uncertainty in the weeks ahead, which could continue to drive volatility,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial.
Trump again lobbed claims of fraud at the voting process, even when the head of the FBI has said there has not been any significant coordinated national voter fraud. The tone was combative through the night, with plenty of insults and talking over one another, and reflective of the country’s deepening partisan divide.
Shares of data-mining company Palantir jumped 47 per cent to $UD10.67 on their first day of trading. The company was born 17 ago with the help of CIA seed money. Palantir isn’t selling new shares to raise money. Instead, it’s listing existing shares for public trading.
Stocks of airlines and other travel-related stocks rose amid the widespread gains. Norwegian Cruise Line Holdings jumped 2.2 per cent, United Airlines Holdings rose 2.2 per cent and American Airlines Group climbed 2.4 per cent. Across the S&P 500, more than 90 per cent of the stocks were higher.
Despite the gains, the S&P 500 remains on track for a loss of 3.1 per cent for September. Wall Street’s momentum slowed this month amid worries that stocks simply got too expensive following their tremendous run from the spring into summer.
In Europe, Germany’s DAX fell 0.5 per cent on Wednesday. The CAC 40 in Paris fell 0.6 per cent, and London’s FTSE 100 shed 0.5 per cent.
In Asia, Japan’s Nikkei 225 lost 1.5 per cent, Hong Kong’s Hang Seng rose 0.8 per cent and stocks in Shanghai slipped 0.2 per cent.
The yield on the 10-year Treasury rose to 0.69 per cent from 0.66 per cent late Tuesday.
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