By Joy Wiltermuth and Sunny Oh
U.S. stock indexes booked solid gains Monday, kicking off the week on a positive note as investors embraced hopes of additional fiscal stimulus, but looked for more clarity on the White House race and the state of the economy.
The S&P 500 SPX rose 53.14 points, or 1.6%, to end at 3,351.60. The Nasdaq Composite COMP climbed 203.96 points, or 1.9%, to close at 11,117.53. The Dow Jones Industrial Average DJIA advanced 410.10 points, or 1.5%, finishing at 27,584.06, while booking its third session of gains in a row.
The Russell 2000 Index /zigman2/quotes/210598147/delayed RUT -1.48% of small-capitalization companies outperformed, booking a 2.4% gain to close at 1,510.35.
Last week, the Dow finished down 1.8% and the S&P 500 index recorded a 0.6% decline, both marking their longest losing streaks since August of 2019. The Nasdaq Composite Index gained 1.1% for the week, ending its three-week losing skid.
Wall Street got off to a positive start on Monday and remained elevated as Washington took another stab at reviving talks on stalled coronavirus stimulus aid, a hoped-for development that has been viewed as a key driver of the market’s next bullish phase.
“There’s been concern that the momentum of the econonic recovery was slipping with Congress delaying fresh stimulus,” Bruce Bittles, chief investment strategist at Baird, told MarketWatch. “Now it looks like we’re closer to getting a package sooner or later.”
House Speaker Nancy Pelosi over the weekend said there’s a chance that a deal on new aid can be achieved.
“I trust Secretary [Steven] Mnuchin to represent something that can reach a solution, and I believe we come to an agreement,” Pelosi said on CNN’s “State of the Union.” Reports indicated that an aid package could be voted on at the beginning of next month, with Pelosi advocated for a $2.2 trillion deal to help out-of-work Americans and businesses hard hit by the COVID-19 pandemic.
But bargain shopping might also have served as a potential catalyst for the push higher in stocks, after weeks of consecutive selling in U.S. equities.
“Markets are trying to regain their footing, but with so much election uncertainty looming, that may take time,” said James Meyer, chief investment officer for Tower Bridge Advisors.
The first televised presidential debate has been set for Tuesday between President Donald Trump and Democratic challenger Joe Biden, which could help to influence the trajectory of the 2020 race for the White House, with Biden leading by 7 percentage points, 49.8 to 42.8, in an average of national polls by RealClearPolitics .
Wall Street has viewed a Trump second term largely as a continuation of business-friendly policies, with a Biden win as likely to result in a higher tax regime for American corporations and tighter regulations.
Another round of announced corporate mashups, including a so-called “merger of equals” between shale producers Devon Energy /zigman2/quotes/209479244/composite DVN +5.68% and WPX Energy /zigman2/quotes/204372171/composite WPX +7.46% , also provided some additional optimism for Wall Street on Monday.
“A lot of energy companies are suffering and mergers and acquistions make a lot of sense,” Bittles said, in terms of making the companies viable in a tough environment with crude prices hovering near $40 a barrel.
Palantir Technologies /zigman2/quotes/221054928/composite PLTR -5.77% and Asana /zigman2/quotes/221282045/composite ASAN -4.62% also have plans to go public on Wednesday, putting the U.S. initial public offering market near to booking i ts busiest third quarter since the dot.com era.
On the economics front, Cleveland Federal Reserve Bank President Loretta Mester warned on Monday that the U.S. economy remained “fragile” and won’t fully recover until actions are taken to promote a more inclusive economy, during a webinar sponsored by the African American Chamber of Commerce of Western Pennsylvania .