Stocks Rally as Traders Bet on Volatile Election Season
By Anna Isaac and Alexander Osipovich
U.S. stocks rose Monday, recovering some ground after four
consecutive weeks of declines.
The Dow Jones Industrial Average gained 484 points, or 1.8%, in
midday trading. The S&P 500 rose 1.6%, while the
technology-heavy Nasdaq Composite climbed 1.4%.
The gains came as investors said last week's selloff was
"There's been a lot of froth in markets recently that has been
washed out. The underlying fundamentals are all moving in the right
direction," said Hani Redha, a portfolio manager at PineBridge
Investments. "We are in the early stages of a multiyear expansion.
It will remain volatile in the coming weeks, but overall the trend
will remain upward."
The financial and industrial sectors, which tend to be sensitive
to economic trends, were among Monday's strongest performers.
Citigroup and Morgan Stanley were both up more than 3%.
Thomas Hayes, chairman of investment-management firm Great Hill
Capital, said his firm had bought shares of Wells Fargo and other
banks in recent days. He expects such stocks to fare better than
the technology stocks that drove the market's rally from March to
"That's where you're going to outperform, with the things that
have been left behind so far," he said. Cyclical stocks like banks
tend to beat the broader market during recoveries from recessions,
September has been a turbulent month for stocks, with declines
in tech stocks pulling down major indexes. The S&P 500 is off
more than 6% from the record high it reached at the start of the
The Cboe Volatility Index, a measure of expected swings in the
S&P 500, climbed Monday. Investors' concerns about rising or
elevated levels of coronavirus infections, the uneven pace of
economic recovery, political risks and continued tensions between
Beijing and Washington have increased the turbulence in the market
Traders are betting on one of the most volatile U.S. election
seasons on record, wagering on unusually large swings in everything
from stocks to currencies. Investors are scooping up a variety of
investments that would pay out if volatility extends far beyond
Election Day itself, concerned that the outcome of the presidential
contest could remain unclear into December.
"It's a very different environment than that we've seen for any
other election," said James McCormick, a strategist at NatWest
Markets. "As an investor, you have to protect yourself because you
just don't know how this is going to swing."
Investors have grown more concerned about this election after
President Trump has repeatedly suggested, without offering
evidence, that mail-in ballots will result in widespread fraud
"We've had a lot of comments from President Trump last week
indicating that he may not want to hand over power smoothly," said
Jane Foley, head of foreign-exchange strategy at Rabobank. "You're
in an environment where you've had physical Black Lives Matter
protests and a rise in unemployment. That's more likely to be a
tinderbox for social unrest."
In corporate news, shares of Devon Energy rose 9.2% after The
Wall Street Journal reported and the company later confirmed a
merger agreement with WPX Energy. The move could help the two
companies weather a prolonged industry slump. WPX's stock rallied
Uber shares gained 5% after the ride-hailing company won an
appeal over the revocation of its operating license in London,
ending for now a yearslong tussle with regulators in one of its
biggest global markets.
Overseas, the pan-continental Stoxx Europe 600 rose 2%. In Asia,
most major benchmarks ended the day in positive territory. Japan's
Nikkei 225 Index rose 1.3%, while Hong Kong's Hang Seng rose
China's Shanghai Composite Index slipped less than 0.1%. New
government data showed the nation's industrial profit grew at a
slower pace in August as the export sector faced challenges with
the reopening of overseas factories.
In bond markets, the yield on the benchmark 10-year Treasury was
little changed, ticking up to 0.661% from 0.659% Friday.
Futures on Brent crude, the global energy benchmark, rose 0.6%
to $42.68 a barrel.
Write to Anna Isaac at firstname.lastname@example.org and Alexander
Osipovich at email@example.com
(END) Dow Jones Newswires
September 28, 2020 12:03 ET (16:03 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.