October 5 through October 9, 2020
Euro Trader P. M4
Emerging Markets P. M4
Commodities P. M5
Striking Price P. M6
Inside Scoop P. M8
13D Filings P. M8
Power Play P. M8
Charting the Market P. M9
Winners & Losers P. M10
Research Reports P. M11
Market View P. M12
Statistics P. M13
28,586.90
52-wk:+6.60%YTD:+0.17%Wkly:+3.27%
Dow Jones Industrials
3477.13
S&P 500
52-wk:+17.06%YTD:+7.63%Wkly:+3.84%
11,579.94
Nasdaq Composite
52-wk:+43.72%YTD:+29.06%Wkly:+4.56%
1637.55
Russell 2000
52-wk:+8.31%YTD:-1.85%Wkly:+6.38%
8%
0
2
4
6
Monday Tuesday Wednesday Thursday Close
Source: Barron’s StatisticsFriday
MARKET PERFORMANCE DASHBOARD
Seeing Red
Trump tweeted that he was pausing
fiscalstimulustalksuntilaftertheelection.
Thatknockedstocksofftheirmodest
afternoon gains.
Discharged
President Donald Trump left the hospital
wherehehadbeentreatedforCovid-19.
Analysts argued that his diagnosis boosted
fiscal-stimulus odds.
BackonTrack
Fiscal stimulus talks resumed, and stocks
rosedespiteadealremainingfaroff.
TheRussell2000indexhititshighestclose
since February.
Risk On
Trump gave a thumbs-up to a $1.8 trillion
stimuluspackage.Stockindexesrose,and
Treasury yields ticked higher.
THE TRADER
Fo rge t
Stimulus.
This Is Why
The Dow
HadaGreat
Week.
S
ometimes the “why” is
less important than the
“what.” And that’s par-
ticularly true for inves-
tors right now.
Try explaining this:
The Dow Jones Indus-
trial Average advanced 904.09 points,
or 3.3%, to 28,586.90 this past week,
its second consecutive weekly gain,
while the S&P 500 index rose 3.8%, to
3477.13, and the Nasdaq Composite
gained 4.6%, to 11,579.94. Even more
shocking, the small-company Russell
2000 index climbed 6.4%, to 1637.55.
A possible stimulus package got
much of the credit—and attention—
this week, and there’s no doubt that
the market would love to see a bill get
passed. The Federal Reserve would
too, as Fed Chairman Jerome Powell
continued to call for the government
to act sooner rather than later. But if it
was all about stimulus, we suspect
that the swings to the downside would
have been larger when President Don-
ald Trump said he was calling off ne-
gotiations, and the market wouldn’t
simply have shrugged off every other
misstep along the way.
Another possibility for the rapidly
rising market: It’s looking ahead to a
Blue Wave, which would see not only
Joe Biden win the election, but Demo-
crats hold the House of Representa-
tives and take the Senate too. In that
case, the stimulus might be even
larger than a package now would be.
Jefferies economist Aneta
Markowska, for instance, removed a
stimulus package from her 2020 fore-
cast two weeks ago and still doesn’t
expect it to become law this year. She
does, however, suspect that if the Dem-
ocrats sweep, they will seek to pass the
original $3.4 trillion Heroes Act that
cleared the House in May. “Even as-
suming a very small fiscal multiplier,
the boost to 2021 growth would be
significant,” Markowska writes.
While the Blue Wave narrative has
picked up speed, it isn’t reflected ev-
erywhere in the market just yet. For
instance, Wells Fargo Securities strat-
egist Chris Harvey notes that bank
stocks have been rallying, even as the
odds of a win by Biden, who would
likely tighten regulation, increase. “To
us, these remain highly unusual and
uncertain times,” Harvey writes.
By Ben Levisohn