By Anna Hirtenstein and Logan Moore
U.S. stocks rose Tuesday on optimism that Congress would reach
an agreement on a spending package to support American households
and businesses through the pandemic.
The S&P 500 added 0.47%, taking back some of its losses from
earlier in the week. The broad-market index fell 1.6% Monday as
investors grew concerned that lawmakers weren't making progress on
a deal.
The Dow Jones Industrial Average, meanwhile, gained 113.37
points, or 0.4%. The tech-heavy Nasdaq Composite Index advanced
0.33%.
House Speaker Nancy Pelosi said that the White House needs to
reach a deal with Democrats by the end of Tuesday if the government
wants to pass the next coronavirus-relief bill before Election Day.
The California Democrat and Treasury Secretary Steven Mnuchin have
edged closer on some policy differences recently, Mrs. Pelosi said
Tuesday, but disputes remain.
"There has to be some form of a deal: The most likely outcome is
that they'll have to do something. Given what's happening with
Covid, the economy needs some support and markets need some form of
guidance," said Peter Dixon, an economist at Commerzbank. But "we
are really running out of time," he cautioned.
Markets have swung in recent weeks on every twist in the talks.
If passed, the stimulus package could drive a further rally in
stocks.
In bond markets, the yield on the benchmark 10-year U.S.
Treasury note rose to 0.796% from 0.760% on Monday.
Investors also are continuing to assess the elevated number of
new coronavirus infections in the U.S. and Europe in recent weeks.
Restrictions in some countries including the U.K. and France have
been tightened, though most governments have avoided halting
business activity completely, shielding the economy from the worst
of the fallout.
"On the virus front, headlines are getting worse, but our base
case is still that there won't be another full lockdown," said
Fahad Kamal, chief investment officer at Kleinwort Hambros.
"There's still a big difference between localized, targeted
lockdowns and the shutdowns we had in March and April."
In economic data, permits for new construction in the U.S. were
at 1.553 million in September, rising moderately compared with the
previous month. The figures were slightly above economists'
expectations, reflecting a continued recovery in the bedrock
industry.
The rise in permits shines a bright light on the economy, said
Michael Sheldon, chief investment officer at RDM Financial Group.
He said this is in line with other housing data that has recently
been released.
Other indicators to lookout for, he said, include the monthly
leading economic index that will be released Thursday. This will
give investors a clear view of what the next six to 12 months will
look like.
In recent weeks, RDM has been trying to ignore the presidential
election and focus on indicators like gross domestic product and
employment.
"We often take the longer-term perspective," he said.
Lisa Erickson, head of the traditional investment group at U.S.
Bank Wealth Management, said the economy is showing a nice recovery
so far from the pandemic, but an uptick in cases isn't helping.
In the longer term, Ms. Erickson said the election shouldn't
have a big impact on the market.
"If you look at past presidential elections and if you look at
scenarios with the incumbent keeping the seat, the return scenarios
are the same over time," she said.
Meanwhile, the earnings-reporting period continued for many
companies.
Property-casualty insurer Travelers added 5.6% after reporting
that its net income more than doubled in the third quarter.
IBM shares dropped 6.5% after it reported results after hours
Monday which included a decline in revenue and no guidance on its
outlook.
Among other stock movers, shares of drugmaker Moderna rose 0.5%
after it said its coronavirus vaccine could be authorized in
December if it gets positive results next month from its clinical
trial.
Overseas, the pan-continental Stoxx Europe 600 edged down
0.35%.
In European equities, Logitech rallied 16% after it posted a
massive jump in sales from a spike in demand for computer equipment
as more people worked from home.
UBS shares rose 5.28% after it said its net profit doubled from
a surge in trading and it is setting aside billions for dividends
and share buybacks.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com
(END) Dow Jones Newswires
October 20, 2020 17:08 ET (21:08 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.