U.S. stocks rose on Monday as investors monitored stimulus negotiations in Washington and prepared for a busy week of corporate earnings.
The Dow Jones Industrial Average rose 254 points, or 0.9%. The S&P 500 gained 1.3% and the Nasdaq Composite advanced 2%.
Tech stocks led the early gains. Facebook and Amazon advanced 2.9% and 4.3%, respectively. Netflix gained more than 1% and Alphabet popped 2.5%; Microsoft gained 1.9%. Apple jumped more than 4%. Later this week, Apple is expected to unveil its first 5G iPhone.
Monday’s advance follows a strong week for the stock market. The Dow jumped 3.3% to post its biggest one-week gain since August, while the S&P 500 and Nasdaq Composite gained 3.8% and 4.6%, respectively, for their best weeks since July.
“Markets last week appeared to price perceived election clarity, and with it, a growing likelihood of additional fiscal stimulus – at least in the pipeline. This was reflected from small cap outperformance to rising Treasury yields,” Julian Emanuel, BTIG’s chief equity and derivatives strategist, said in a note to clients Sunday.
Traders are still holding out hope for some sort of stimulus even as chances for another round before the election appeared to dim over the weekend. Both House Speaker Nancy Pelosi, D-Calif., and Senate Republicans pushed back on a $1.8 trillion offer from the White House.
In a letter to colleagues, Pelosi highlighted what she said were insufficient offers on healthcare issues.
“The news is filled with the numbers in terms of dollars. The heart of the matter is: can we allow the virus to rage on and ignore science as the Administration proposes, or will they accept the scientific strategic plan in the Heroes Act to crush the virus,” Pelosi said, referring to a bill that Democrats already passed in the House.
Meanwhile, Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows called for a separate vote on the Paycheck Protection Program in their own letter to Congress on Sunday.
The apparent impasses follows a whirlwind week in Washington that saw President Donald Trump at one point call off negotiations, saying that Congressional Republicans should focus on confirming Amy Coney Barrett to the vacant Supreme Court seat. Trump then reversed his position and said to “go big” in negotiations.
But Mike Wilson, chief U.S. equity strategist at Morgan Stanley, told CNBC’s “Squawk on the Street” he thinks “there’s enough stimulus in the pipeline for now to kind of get us through year-end without causing a risk of a double-dip recession, and ultimately, no matter who wins the election, by the first quarter we’ll have an additional stimulus that’s probably still required to make sure that the recovery continues.”
Monday’s moves also come as traders brace for the third-quarter earnings season. Several major banks and airlines are slated to report their results this week, including JPMorgan Chase and Delta Air Lines on Tuesday.
While results for the period are expected to decline significantly, traders believe the results could come in much better than expected.
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