Dow rises 100 points — now at its highest level in a month

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Market will be more interested in the size of the stimulus rather than time it arrives: Portfolio manager
Market will be more interested in the size of the stimulus rather than time it arrives: Portfolio manager

Stocks rose on Thursday as traders weighed the latest comments from House Speaker Nancy Pelosi and President Donald Trump regarding further fiscal aid. 

The Dow Jones Industrial Average closed 122.05 points higher, or 0.4%, at 28,425.51 and reached its highest level in a month. The S&P 500 gained 0.8% to end the day at 3,446.83 and the Nasdaq Composite advanced 0.5% to 11,420.98.

Shares of airline companies were higher in volatile trading. United and Delta each traded higher by more than 1%. American Airlines advanced 0.6%. The three airline stocks were briefly lower before  recovering. IBM shares popped nearly 6% to lead the Dow higher after the company announced its plan to spin off its IT infrastructure unit

Pelosi, D-Calif., told reporters there will not be a stand-alone stimulus bill for airlines — something President Donald Trump had pushed for the day before —  without a bigger aid package. Earlier in the day, Trump told Fox Business that the administration and Democrats were "starting to have some very productive talks."

"We'll see if we can get something done before the election. That would be a favorable outcome," said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. "If that starts to turn around, then we could see another blip in the market like the one we saw on Tuesday."

Investors also digested the latest U.S. weekly jobless claims data on Thursday, which showed an additional 840,000 Americans filed for unemployment benefits for the first time. Economists polled by Dow Jones expected first-time claims for unemployment insurance to total 825,000 for the week ending Oct. 3.

Wall Street was coming off a strong session, with the Dow posting its biggest one-day gains since mid-July on Wednesday. 

"Even though there is uncertainty now about the fiscal stimulus negotiations, regardless of who wins the election, we are likely to have additional fiscal stimulus," said Nancy Davis, founder and portfolio manager at Quadratic Capital.

"With the uncertainty, I think it's important for investors to have a diversified portfolio, with investments that are uncorrelated to each other. We should expect more uncertainty going forward," she added.

The major averages are higher for October after clawing back losses suffered in September, the market's first negative month since March. Still, a host of risks remain in the market, including rising Covid-19 cases around the world, as well as a slowdown in the rate of the economic recovery. 

"The risks we are now facing—medical, economic, and political—have waxed and waned over the year, so a difficult quarter will be nothing new," noted Brad McMillan, Chief Investment Officer for Commonwealth Financial Network.

"In fact, after the election, there is a good chance next year will look much better. We will have to wait and see, but for the moment, be prepared for volatility — but remember that it will pass," he added.

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