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Dow Rallies 300 Points as ISM Data Show U.S. Recovery on Track

Published October 5, 2020 6:16 PM
Francois Aure
Published October 5, 2020 6:16 PM
  • The Dow  Jones rose more than 300 points on Monday.
  • Investors cheered strong ISM data and progress towards fiscal stimulus in Congress.
  • Joe Biden’s strong polling is looking positive for Wall Street.

The Dow Jones rallied to start the week, as investors responded to stellar PMI data and reports that President Trump’s condition is improving.

Dow Jones Climbs As PMIs Impress Wall Street

All three of the major U.S. stock market indices rallied more than 1% on Monday.

Dow Jones, Stock Market
The Dow Jones rallied over 300 points on Monday. | Source: Yahoo Finance 

U.S. economic data looked positive on Monday, as the ISM non-manufacturing index  beat forecasts. Unfortunately, it was not all positive, as the Markit Composite PMI slightly underperformed.

ING responded to the recent ISM data , noting that while the numbers should be taken with a pinch of salt, they do indicate economic momentum remaining on the upswing:

One note of caution is that it is important to remember that this is a diffusion index so it is more about the breadth of the recovery rather than the actual pace. It is difficult to translate directly what it means for GDP growth. Nonetheless, the fact that both the manufacturing and non-manufacturing surveys are back up at the levels before the Covid-19 containment measures were introduced suggests a broad-based recovery.

Meanwhile, stimulus talks continue to creep towards some form of resolution. Nancy Pelosi has been making all the right noises , and even President Trump tweeted about the need to pass new legislation. With the House Speaker already rejecting an offer of $1.6 trillion, this is probably the last chance for a deal before the election.

Donald Trump, Dow Jones
Donald Trump joined Nancy Pelosi in calling for Congress to pass more stimulus. | Source: Donald Trump via Twitter 

While Democrats don’t want to give markets a pro-Trump pre-election boost, the press cycle has been well crafted, and Pelosi looks committed to providing some relief after her recent comments.

Trump Condition Improves as Biden Extends His Lead

President Trump is reportedly doing well and responding positively to Covid-19 treatment. Equity markets declined on Friday after the president reported he had contracted the novel disease. His swift recovery has investors feeling optimistic.

In addition to the expected return of Trump to the White House, polling data are also in focus for Wall Street today. A recent poll from NBC/Wall Street Journal shows former Vice President Joe Biden opening up a commanding 14-point lead in a recent national poll.

While investors have seen contrasting signals as to what a victory for each candidate would mean for stocks, it is evident that a clear outcome is preferred.

Watch the video for JPMorgan’s take on the impact of a Democrat victory in November.

It remains to be seen whether Wall Street is being complacent with the risks of Biden tax hikes. For now, those risks are not reflected in stock prices.

Dow 30 Stocks: Rising on the Tide

It was a strong day in the Dow 30, with stocks rallying across the board. Apple stock rallied around 2%, while the Dow Jones’ heaviest weighted stock, UnitedHealth, gained 1.6%.  The only company spending any time meaningfully in red was Coca-Cola, which declined by 0.3%.