US stocks shake off a wobbly start and end mostly higher
Stocks shrugged off a sluggish start and ended mostly higher on Wall Street Friday.
The S&P 500 managed a gain of 0.3%, but still posted its first weekly loss in four weeks.
Facebook led gains in communications stocks.
Intel fell sharply after reporting weakness in its data center business. Intel’s drop pulled the Dow Jones Industrial Average to a small loss.
Stocks have been mostly pushing higher this month after giving back some of their big gains this year in a sudden September swoon. Treasury yields remained near their highest level since June, and crude oil prices fell.
The Nasdaq composite, which is heavily weighted with technology stocks, was flat. European markets were broadly higher.
Stocks have been mostly pushing higher this month after giving back some of their big gains this year in a sudden September swoon. The S&P 500 notched a gain in each of the past three weeks and is up about 2.7% for the month heading into the final week of October.
More recently, trading on Wall Street has been choppy as investors keep an eye on the ongoing negotiations between Republican and Democractic leaders in Washington over another round of aid for businesses and millions of people who have lost their jobs during the coronavirus pandemic. The last round of supplemental aid for unemployed Americans expired at the end of July.
“It’s generally been a little more of a selling market, and a lot of that has to do with waiting to see whether or not we get a fiscal stimulus package before the election,” said Sal Bruno, chief investment officer at IndexIQ. “The odds of that are getting lower and lower the closer we get to the election.”
While House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been negotiating daily this week on a possible aid package. On Thursday, Pelosi said that progress is still being made, but any compromise will likely face stiff resistance from Republicans in the Senate.
Wall Street is worried that if an agreement on more economic aid isn’t reached before the Nov. 3 election, it could leave the matter in limbo should there be a protracted delay in sorting out the outcome of the voting.
“You have political incentives going on right now to try and get something done,” Bruno said. “Once the election has passed, depending on the outcome, maybe some of those political incentives shift. It scrambles the deck quite a bit.”
In their debate late Thursday, President Donald Trump and his Democratic challenger Joe Biden managed a more substantive exchange than during their first raucous clash several weeks ago. There were no major market-moving surprises.
“The final U.S. presidential debate was less chaotic than the first but offered little new information to inform the result for markets,” Stephen Innes of Axi said in a commentary. “Meanwhile, discussion relevant to the post-election economic outlook was limited, particularly from President Trump.”
Uncertainty over whether Uncle Sam will provide more support for the economy was overshadowing solid earnings reports from big companies. While many have reported profits for the summer that took a hit from the coronavirus-caused recession, their results have been mostly not as bad as feared.
Barbie maker Mattel jumped 10.8% after its latest earnings blew past analysts’ forecasts. Capital One Financial gained 1.7% after turning in robust results.
Some companies’ results didn’t live up to Wall Street’s expectations. American Express was down 3.4% and chipmaker Intel sank 10.9%, the biggest decline in the S&P 500.
Drugmaker Gilead rose 0.7% after U.S. regulators gave formal approval to its antiviral drug remdesivir to treat patients hospitalized with COVID-19.
Treasury yields dipped but remain near their highest levels since June. The 10-year Treasury yield slipped to 0.84% from 0.87% late Thursday.
The recent pickup in bond yields follows recent encouraging data on residential construction, homebuying and retail sales. It also suggests bond investors are more optimistic that the economy will receive more aid from Washington.
“The fact that (bond yields) have been moving up is not just in support of actual data, but that the data will continue getting better moving forward, which depends to a large extent on getting a stimulus package,” Bruno said.
Markets in Europe were moving higher. Germany’s DAX gained 0.7%, while the CAC 40 in Paris rose 1% as investors welcomed strong corporate earnings from the likes of automaker Daimler and took in their stride a gloomy economic report. Britain’s FTSE 100 gained 1.2% after Japan and the U.K. signed a trade agreement to replace the pact with the EU, which will no longer apply after Britain’s exit from the bloc.
Stock markets in Asia closed mostly higher.
AP Business Writer Elaine Kurtenbach contributed.