Stocks rose on Thursday as traders weighed House Speaker Nancy Pelosi's latest remarks on the U.S. fiscal stimulus negotiations.
The Dow Jones Industrial Average closed 152.84 points higher, or 0.5%, at 28,363.66. Earlier in the day, the Dow fell as much as 170 points. The S&P 500 gained 0.5% to close at 3,453.49 and the Nasdaq Composite climbed 0.2% to 11,506.01.
Banks led the gains on Thursday as the 10-year Treasury yield hit a four-month high. JPMorgan Chase and Morgan Stanley popped 3.5% and 2.8%, respectively. Citigroup advanced 2.2%.
Pelosi said Thursday a deal on new coronavirus aid was "just about there." She also said: "If we were not making progress, I wouldn't spend five seconds in these conversations. … This is not anything other than I think a serious attempt. I do believe that both sides want to reach an agreement."
To be sure, Pelosi noted that both sides have yet to reach an agreement on certain key issues, including state and local funding. She also cautioned it could take "a while" for lawmakers to actually write and vote on any aid bill.
"With no clear end to the pandemic in sight, the economy needs additional fiscal support that will last for several months," Prajakta Bhide, a strategist at MRB Partners, said in a note. "The passing of a sizeable additional fiscal stimulus by the beginning of next year, and better control over the COVID-19 pandemic next year via the timely approval of a medical solution will be essential to ensure continued economic growth next year."
Companies continued to file third-quarter earnings reports on Wednesday, with electric car maker Tesla and Coca-Cola releasing their latest quarterly numbers.
Elon Musk's Tesla reported its fifth straight quarter of profits, posting per-share earnings of 76 cents versus the consensus estimate of 57 cents expected by analysts polled by Refinitiv. The company had already reported that it delivered 139,300 vehicles during the quarter, a new record for Tesla.
CEO Musk noted on the company's earnings call that Tesla plans to start delivering cars from new factories in Brandenburg, Germany and Austin, Texas in 2021 but that output could be slow at first. The stock was up 0.8%.
Coca-Cola rose more than 1% after the company reported a stronger-than-forecast profit for the previous quarter. CSX and AT&T also traded higher on the back of better-than-expected earnings.
Traders also looked ahead to the second, and final, presidential debate between Trump and former Vice President Joe Biden, which is slated to start at 9 p.m. ET.
The U.S. election is set to take place on Nov. 3. Recent polls show Biden ahead of Trump and are also pointing toward a potential "Blue Wave" in which the Democrats would win the presidency, obtain a Senate majority and keep control of the House.
Some investors have been warming up to the idea of a Democratic sweep, noting it could make it easier to push through more fiscal stimulus in the future.
"I think that narrative around what will happen if we have that blue wave will be correct in the sense that next year you're going to get a massive fiscal stimulus, you're going to get a big boost to the economy. There's no doubt that Main Street under this program is going to benefit," said billionaire hedge fund manager Paul Tudor Jones on CNBC's "Squawk Box."
However, Jones warned of the potential impact from Biden's tax overhaul on the market.
"But the other side of that is what also happens to financial assets. I think under a blue wave, and the Biden tax plan, financial assets over the long run suffer a great deal," he said.
On the data front, the Labor Department said weekly jobless claims fell to 787,000 for the week ending Oct. 17. It was the second time since March that claims came in below 800,000. Economists polled by Dow Jones expected first-time applicants for state unemployment insurance to have totaled 875,000.
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Correction: This story has been updated to reflect that weekly jobless claims came in below 800,000 for the second time since March.