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Dow futures up nearly 400 points as investors count down to election – MarketWatch


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U.S. stock-market benchmarks were solidly higher at noon Monday, bouncing back after an ugly finish to October, with support tied to upbeat global economic data on the eve of Election Day, as markets continue to monitor rising COVID-19 cases and a stream of corporate earnings results.

What are major indexes doing?

The Dow Jones Industrial Average
DJIA,
+1.21%

climbed 418 points, or 1.6%, to 26,921. The S&P 500
SPX,
+0.86%

rose 1.2% to 3,309. The Nasdaq Composite
COMP,
-0.02%

added 0.3% to 10,948, lagging the gains of their peer benchmarks.

Stocks ended lower Friday, capping a losing week and month for major indexes. The Dow
DJIA,
+1.21%

fell 4.6% last week, leaving the blue-chip gauge with a monthly loss of 6.5% — its largest since March. The S&P 500
SPX,
+0.86%

saw a 5.6% weekly loss, leaving it down 2.8% for the month; the Nasdaq Composite
COMP,
-0.02%

suffered a 5.5% weekly fall, leaving it down 2.3% in October.

Last week’s declines for the Dow, S&P 500 and Nasdaq were the largest since March.

What’s driving the market?

Equities were enjoying an upbeat tone ahead of Tuesday’s U.S. elections as investors took heart in positive economic data from across the world. Still, worries of a drawn-out ballot count and an unclear election outcome this week remained the biggest risk to markets, analysts said.

A final Wall Street Journal/NBC News poll published Sunday showed Democratic challenger Joe Biden holding a 10 percentage point lead — 52% to 42% — over President Donald Trump. Biden’s lead was essentially unchanged from an 11-point lead seen in mid-October, but the survey did portray a tightening race in battleground states that could determine the outcome in the electoral college.

“As both candidates will opt for big increases in fiscal spending over the coming months, investors don’t seem too bothered about who will win. The markets will prefer a clear outcome — although this may not be the case,” said Fawad Razaqzada, market analyst at ThinkMarkets, in a note.

He said a contested outcome “could trigger a big selloff for stocks and other risk assets, and send safe haven dollar and yen higher,” he said.

Meanwhile, analysts said upbeat economic data appeared to bolster equities on Monday.

The IHS Markit final U.S. manufacturing index rose to 53.4 in October versus an initial reading of 53.3. And the Institute for Supply Management’s more closely watched manufacturing activity index climbed to a 13-month high of 59.3 last month from 55.4 in September. Readings over 50 indicate growth.

The positive data represented “good news for equity markets, particularly for cyclical sectors that have lagged technology names in recent months,” said Jim Baird, chief investment officer for Plante Moran Financial Advisors.

Outside the U.S., the Caixin manufacturing purchasing managers index, a gauge of activity in China’s manufacturing sector, rose in October — a positive sign for domestic demand that provided a lift to Asian markets early Monday. It was a similar story in Europe after upbeat PMI readings.

Last week’s selloff was tied in large part to a surge in COVID-19 cases that triggered new restrictions on activity in European countries and stoked worries about the fate of the U.S. economic recovery.

The U.S. recorded 81,400 new cases on Sunday, a slight increase from the previous day, but down from the record seen late last week, The Wall Street Journal reported, citing data from Johns Hopkins University. The seven-day average of new cases continues to exceed the 14-day average in most states, the newspaper reported, indicating a continued acceleration in the spread of the virus.

Investors face another torrent of corporate results in the week ahead, with 128 S&P 500 companies due to issue results. Earnings for the S&P are set to decline for a third straight quarter as they deal with the pandemic, but the drop appears set to be less drastic than initially feared.

After last week’s barrage of earnings, including strong results from technology heavyweights, FactSet said its model now looks for a 9.8% blended profit decline for the S&P 500 versus its initial call for a 20.5% drop before the start of earnings season.

Which companies are in focus?
  • Clorox Co. CLX shares rose 4.7% after the provider of home cleaning and care and health and wellness products reported a profit that significantly exceeded expectations, boosted by strong sales growth due to the COVID-19 pandemic and as people spend more time at home.

  • Shares of Estee Lauder Cos. EL were up 2.4% after the company reported a fiscal first-quarter profit and sales that beat expectations, with a strong performance in skin care sales offsetting weakness in makeup, but provided a downbeat outlook for the current quarter.

  • Lumber Liquidators Holdings Inc. LL shares surged nearly 20% after the wood-flooring seller reported third-quarter profit and sales that rose well above expectations.

  • Wingstop Inc.
    WING,
    -0.08%

    shares were nearly flat after the chicken chain said in preliminary third-quarter earnings that systemwide sales rose 32.8% to $509.2 million.

  • Shares of Norwegian Cruise Line Holdings Ltd.
    NCLH,
    -3.69%

    slumped 3.7% after the cruise operator said it was extending suspension of its cruises to include those scheduled through Dec. 31.

  • Shares of Nio Inc.
    NIO,
    +7.61%

    soared toward a record Monday, after the China-based electrical vehicle maker reported October deliveries that doubled to a monthly record of more than 5,000 vehicles.

What are other markets doing?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
0.840%

 fell 2 basis points to 0.84%. Yields and bond prices move in opposite directions.

The pan-European Stoxx 600 Europe
SXXP,
+1.60%

 rose 1.6%, while London’s FTSE 100 stock index
UKX,
+1.39%

 gained 1.4%.

Oil futures rebounded, with the U.S. benchmark
CL.1,
+1.92%

rising 1.3% to $36.26 a barrel on the New York Mercantile Exchange. Gold found support, with the December contract
GCZ20,
+0.79%

 up 0.8% to $1,893.90 an ounce.

The ICE U.S. Dollar Index
DXY,
+0.13%
,
 a measure of the currency against a basket of six major rivals, was up 0.1%.

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