By Joy Wiltermuth and Sunny Oh
U.S. stock indexes closed higher Monday on optimism about President Donald Trump’s response to COVID-19 treatments and hopes for additional fiscal stimulus, both potentially poised to blunt the the pandemic’s toll.
The Dow Jones Industrial Average DJIA closed 465.83 points higher, or 1.7%, at 28,148.64. The S&P 500 SPX advanced 60.16 points, or 1.8%, to end at 3,408.60, while the Nasdaq Composite COMP finished up 257.47 points at 11,332.49, a gain of 2.3%.
The Russel 2000 Index /zigman2/quotes/210598147/delayed RUT -3.69% of small-capitalization stocks outperformed, ending 2.8% higher, a gain of 42.67 points, to close at 1,581.96.
The Dow /zigman2/quotes/210598065/realtime DJIA -1.75% on Friday fell 134.09 points, or 0.5%, to 27,682.81, but benchmarks ended well off session lows after the initial news of Trump’s diagnosis. The S&P 500 on Friday ended 32.36 points lower, down 1% at 3,348.44, while the Nasdaq Composite finished 251.49 points lower, down 2.2%, at 11,075.02.
A key driver for U.S. stocks on Monday was hope that experimental drugs used to treat Trump for COVID-19 might become more widely available to the public during the pandemic than expected.
“If the leader of the free world is taking an experimental drug,” it could mean that drug developers might be able to push through COVID-19 therapies sooner than expected, said Robert Pavlik, chief investment strategist at SlateStone Wealth, in an interview.
“Also, there’s a belief that we’re closer to some type of stimulus from Congress,” he said.
Trump tweeted on Monday afternoon that he would be discharged from Walter Reed National Military Medical Center at 6:30 p.m., following a three-night stay.
Trump’s physician Sean Conley said Trump met or exceeded discharge criteria, but that he’s not yet “out of the woods” and that the next seven days will be crucial.
Investors were bracing for a volatile run-up to the Nov. 3 presidential election even before Trump’s diagnosis last week. On Monday, the West Wing outbreak grew, including after White House press secretary Kayleigh McEnany tested positive.
Trump’s contraction of the virus also “could lead to far broader adoption of mask-wearing as average Americans,” wrote Kristina Hooper, Invesco’s chief global markets strategist. “In turn, this could slow the spread of COVID-19, which should be a significant positive for the economy, especially as we worry about a possible second wave this fall.”
New York City on Monday said that schools in hotspot s, including several ZIP Codes in Brooklyn and Queens, will close Tuesday. French authorities placed Paris back on “high alert” for COVID-19 Monday, banning festivals and closing bars in the French capital and limiting social gatherings.
Hooper also said Senate Republicans now might recognize “how virulent the disease is, which could in turn prompt them to agree to a larger stimulus package.”
Results of a Wall Street Journal/NBC News poll conducted in the two days following Tuesday’s highly contentious presidential debate, but before news of Trump’s COVID-19 diagnosis, showed Biden expanding his lead to 14 percentage points, a 53% to 39% advantage, among registered voters. The survey showed Biden with an 8-point lead last month and an 11-point advantage in July, previously his largest margin of the campaign.
Analysts said prospects for a more decisive outcome on Nov. 3 could be a positive for markets. Fears have grown of an inconclusive election result that could see weeks of contentious political and legal wrangling.