Topline

 The market moved sharply higher on Monday, trying to recover from its fourth straight week of losses, as shares of tech stocks and banks led the rally.

Key Facts

The Dow Jones Industrial Average was up 1.7%, nearly 500 points, on Monday, while the S&P 500 rose 1.5% and the tech-heavy Nasdaq Composite gained 1.4%.

With only a few days of trading left in September, all three major averages are still on track to post their first monthly losses since March, when the stock market hit a low point during the coronavirus pandemic. 

Big Tech stocks, which have been the main source of the market’s sell-off in September, rebounded on Monday: Shares of Amazon, Apple, Microsoft, Facebook and Google-parent Alphabet all rose.

Bank stocks also led the market higher, with JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley all rising by around 2% or more.

Market sentiment was lifted after House Speaker Nancy Pelosi said on Sunday that a last-minute coronavirus stimulus deal could still happen before the election, even as Democrats try to forge ahead with a revised relief package worth $2.4 trillion.

Democrats could vote on the bill as soon as next week if an agreement is not reached with Republicans (the GOP has advocated for a bill costing no more than $1.5 trillion).

Shares of companies that would benefit from a reopening of the economy—including airlines and cruise operators—also moved higher on Monday.

Crucial Quote

“Stocks are experiencing strong gains in most major markets, although there isn’t a single reason why,” says Adam Crisafulli, founder of Vital Knowledge, in a note. “The vaccine backdrop is the same as before, and investors could find out in less than a month that one or more of the P3 candidates is safe/effective,” he adds. On the stimulus front, “Pelosi expressed optimism for a pre-election fiscal deal over the weekend, but the House vs. Senate gap is still very large (it remains unlikely that incremental fiscal action arrives before 11/3).”

Key Background

Wall Street is coming off a sharp rally on Friday, in which the Dow rose over 300 points. The major averages are still on track to post steep losses for September, a historically bad month for stocks. While recent economic data has signaled the start of a recovery from the coronavirus recession, prospects for a quick rebound are dwindling amid uncertainty over fiscal stimulus, a resurgence of coronavirus cases and potentially delayed election results.

What To Watch For

Investors continue to remain anxious about a resurgence of coronavirus cases in Europe and the United States. New cases are rising by at least 5% or more in over half of U.S. states, according to a CNBC analysis of Johns Hopkins University data. On Saturday, new daily coronavirus cases topped 1,000 in New York state for the first time since early June. Across the Atlantic, meanwhile, the U.K. recently went back into lockdown, while France and Spain have seen an alarming spike in new infections. 

Further Reading

Dow Rallies 350 Points, But Stocks Are Down For A Fourth Week In A Row (Forbes)

Stimulus Update: House Democrats Considering New, Smaller Relief Package (Forbes)

Biden, Democratic Victories Would Be Best Outcome For The Economy, Moody’s Says (Forbes)

Stimulus Bill Before Election Day? Unlikely, Wall Street Says (Forbes)

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