Stimulus bets drive Wall Street higher

(C) Reuters. FILE PHOTO: A Wall Street sign is pictured outside the New York Stock Exchange, in New York City

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – Shares on Wall Street climbed on Tuesday on growing optimism that talks among U.S. lawmakers are progressing with respect to a U.S. stimulus package aimed at cushioning the economic shock from the coronavirus pandemic.

House of Representatives Speaker Nancy Pelosi said she was optimistic Democrats could reach a deal with the White House that could get aid out by early next month. She added there should be an indication of a possible agreement later on Tuesday.

Pelosi and Treasury Secretary Steven Mnuchin will also talk at 3 p.m. ET (1900 GMT) on Tuesday, according to a source.

King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco, said he doesn’t believe a full stimulus package would be passed though.

“It’s kind of hard to bridge the gap between $1.8 trillion and $2.3 trillion, but a deal could at least get us through the elections or until December,” Lip said. “By that time, we may have a comprehensive package.”

Uncertainty over the coronavirus aid package weighed on Wall Street’s main indexes on Monday and analysts expect market turbulence to increase with only two weeks left until Election Day.

Latest national opinion polls pointed to a victory for Democratic challenger Joe Biden, though the contest is closer in swing states that decide elections, including Florida, North Carolina and Pennsylvania.

The U.S. Justice Department and 11 states, meanwhile, filed an antitrust lawsuit against Alphabet Inc’s (O:GOOGL) Google for allegedly breaking the law in using its market power to fend off rivals. Alphabet’s shares were up 2.4%.

“It’s like locking the proverbial door after the horse has bolted,” said Neil Campling, head of TMT research at Mirabaud Securities in London.

“Google has already got the monopolistic position, has invested billions in infrastructure, AI, technologies, software, engineering and talent. You can’t simply unwind a decade of significant progress, or create new alternative powerhouses or tech ecosystems out of thin air.”

In mid-afternoon trading, the Dow Jones Industrial Average (DJI) rose 285.28 points, or 1.01%, to 28,480.7, the S&P 500 (SPX) gained 38.65 points, or 1.13%, to 3,465.57 and the Nasdaq Composite (IXIC) added 114.73 points, or 1%, to 11,593.61.

Meanwhile, the third-quarter earnings season has gathered momentum. Of the 66 S&P 500 companies that have reported results, 86.4% have topped expectations for earnings, according to Refinitiv IBES data.

Property and casualty insurer Travelers Cos Inc (N:TRV) gained 4.9% as it beat quarterly profit expectations, while consumer products giant Procter & Gamble Co (N:PG) advanced 0.6% as it raised its full-year sales and earnings forecasts.

Netflix Inc (O:NFLX) was flat ahead of its third-quarter earnings report.

International Business Machines Corp (N:IBM) edged past estimates for quarterly revenue on Monday, bolstered by higher demand for its cloud services. The company’s shares, however, fell 5.8% after it stayed away from issuing a current-quarter outlook, citing economic uncertainty related to the pandemic.

Advancing issues outnumbered declining ones on the NYSE by a 3.33-to-1 ratio; on Nasdaq, a 1.53-to-1 ratio favored advancers.

The S&P 500 posted 25 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 63 new highs and 26 new lows.

Wall Street shares bolstered by stimulus bets