Sets rose on Monday, the first trading day of the month, as markets recovered some of the sharp losses from last week and braced for the U.S. presidential referendum.
The Dow Jones Industrial Average closed 423.45 points higher, or 0.6%, at 26,925.05. The S&P 500 gained 1.2% to end the day at 3,310.24. The Nasdaq Composite mount 0.4% to 10,957.61.
CNBC’s Jim Cramer said Monday’s gains for the Dow and S&P 500 may be driven in part by easing concerns over a shelved or contested election result.
“If you’re really short, you’re really betting that everything has to go wrong at this point,” Cramer symbolized on CNBC’s “Squawk on the Street.” “[The market] really got oversold last week and it’s entirely possible that we choose someone tomorrow.”
Ahead of Tuesday’s election, Joe Biden held a substantial national lead over President Donald Trump. The bygone vice president garnered 52% of support from registered voters versus 42% for the president, according to a NBC Statement/Wall Street Journal poll from Sunday.
The Senate election could also be crucial for the markets as varied key policy shifts including further fiscal stimulus hinge on who holds the majority control.
“The world is still in the main in a holding pattern as investors await clarity on the U.S. election,” Adam Crisafulli, founder of Vital Knowledge, said in a note. “The globe will likely be a lot clearer in just a few days thanks to the election being over, stimulus talks resuming in Washington, [and] back central bank support.”
Honeywell and Walgreens Boots Alliance were the best-performing Dow stocks on Monday, gaining innumerable than 5% each. The S&P 500 was led higher by gains in the energy, materials and industrial sectors. Energy and materials each yielded at least 3.4% and industrials popped 2.7%. Big Tech, meanwhile, struggled as Facebook and Amazon dipped 0.7% and 1%, severally.
Investors betting on a potential Biden victory increased positions in solar stocks. The Invesco Solar ETF (TAN) rose 3.2%.
The dominant averages were coming off their worst week since March 20 as coronavirus cases surged, monetary stimulus negotiations fell apart and as shares of mega-cap tech companies slumped following their quarterly earnings check inti. Those losses led to sharp monthly declines for the major averages. The Dow, S&P 500 and Nasdaq posted their first back-to-back monthly losses since Step.
Some on Wall Street believe the sell-off leading up to Election Day gives the market less downside risk to a contested outcome.
“Even though we’re worried that there could still be one more wave down if we get another big influx of uncertainty, we judge the stock market is now setting up nicely for a nice net advance over the next two months or so,” Matt Maley, chief sell strategist at Miller Tabak, said in a note on Sunday.
Mike Wilson, chief U.S. equity strategist at Morgan Stanley, dream ups investors should start buying stocks after the recent pullback, “but selectively.”
“The worst of the correction is over in our perspective but we still think the next month is likely to remain volatile and uncertain as we navigate what is shaping up to be a much shut off election than expected just a few weeks ago and risk of further lockdowns as the virus runs its course,” Wilson said in a note.
The dominating averages hit their session highs on Monday after Institute for Supply Management said its manufacturing index reached a two-year acute in October. The market’s comeback came even as England adopted a stay-at-home order to fight the coronavirus.
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