US equities began the busiest earnings week on a positive note with the Dow Jones staging a rebound after two days of underperformance. Softening oil prices also provided a lift to stocks.
The Dow Jones gained over 270 points on Monday, while the S&P 500 and the Nasdaq gained close to 0.3% each. The Nasdaq underperformed ahead of five out of the “magnificent seven” companies reporting earnings this week, starting with Google-parent Alphabet, which will report after market hours on Tuesday.
Most major sectors in the S&P 500 ended higher barring energy, which joined the drop in oil prices, with Brent crude falling over 6% after Israel limited their attacks on Iran to the latter’s military establishments.
Bonds fell amid weak demand for a pair of US note sales. Treasury 10-year yields advanced three basis points to 4.27%.
A victory for Trump would be more beneficial for stocks and Bitcoin relative to his Democratic opponent, while a Kamala Harris presidency would bring slightly more relief to housing costs, according to a Bloomberg Markets Live Pulse survey. Some 38% of respondents see equities accelerating a year from now under the Republican candidate, versus 13% under the Democrat.
Trump Media & Technology Group Corp. soared 22% as retail traders touted the stock after Donald Trump’s high-profile event in New York Sunday. The company has traded like a proxy for sentiment of his perceived chances of returning to the White House, with recent moves more correlated with betting markets as opposed to actual polling.
“Markets have been extremely active over the past month as traders have juiced up the already ebullient scenario baked into equity valuations, adding improved odds of a Republican sweep to the list of goodies discounted,” said Lisa Shalett at Morgan Stanley Wealth Management.
Callie Cox at Ritholtz Wealth Management says the pre-election jitters still haven’t shown up in the stock market. The S&P 500 hasn’t had a 1% up or down day this month. If that continues to be the case, it will be the first October without a move that big since 2017, she said. It’d also be the first October of an election year without a 1% move since 1968.
“With a week to go to the election and polls indicating a dead heat, investors are unlikely to take on much new risk, and may even prefer to de-risk until the outcome is known,” said Jason Draho at UBS Global Wealth Management. “Once the dust settles and the outcome is clear, the macro fundamentals should reclaim their spot in the driver’s seat, determining the market direction.”
(With Inputs From Agencies.)