Home / Markets News & Opinions / Dow Soars as U.S. Stock Market Enjoys a Stellar ‘Turnaround Tuesday’

Dow Soars as U.S. Stock Market Enjoys a Stellar ‘Turnaround Tuesday’

Published October 20, 2020 7:02 PM
Francois Aure
Published October 20, 2020 7:02 PM
  • The Dow Jones rose around 300 points on Tuesday.
  • Bulls returned on as Nancy Pelosi remains upbeat on stimulus hopes.
  • Travelers posted impressive earnings, while IBM recorded a third straight quarter of losses.

The Dow Jones rallied on Tuesday, as investors shrugged off a volatile start to the week to drive equity prices higher.

Dow Jones Climbs as Stimulus Talks Cling to Life

All three major U.S. stock market indices rose on Tuesday, with the Dow Jones, Nasdaq, and S&P 500 climbing in almost perfect symmetry.

Dow Jones, Stock Market
The Dow Jones rallied over 300 points at its peak on Tuesday. | Source: Yahoo Finance 

It was a tranquil day on the economic data front, as the only top-tier releases were in the housing sector. Building permits beat forecasts, while housing starts slightly underperformed expectations.

Stimulus negotiations continue to go down to the wire, with each headline still moving the Dow to some extent. Nancy Pelosi helped juice the stock market around midday, as she spoke on Bloomberg of the possibility of a deal being achieved imminently.

Watch the video below for Pelosi’s central thesis in the push for stimulus.

In a comment to CCN.com, senior economist Sebastian Galy at Nordea Asset Management made it clear that a lack of support from Senate Republicans remains a clear stumbling block to aid:

Even if there is a deal with the White House on this final day of negotiation, it might not be accepted by Republicans in the Senate. The odds of a deal being low, this tells us much about the battle between hope and the reality of an economy still under severe shock but recovering.

Senate Majority Leader Mitch McConnell continues to proceed with his plans to vote on a skinny bill, which doesn’t allocate new funds but uses unused money from the CARES Act. Naturally, Wall Street bulls want a lot more than a few hundred billion to help keep equity markets rising.

Providing some extra kick to the turnaround Tuesday after Monday’s weakness, Federal Reserve executive Charles Evans made it clear he was prepared to accept inflation at 2.5% to 2.7% before raising interest rates . That’s good news for a stock market that has almost no interest in inflation risks whatsoever.

Dow 30 Stocks: Travelers Soars, IBM Plummets

A strong day in the Dow 30  was bolstered by a blow-out earnings performance from Travelers, as the insurance company more than doubled its income in the last quarter. Profit was also higher in Q3 and helped send TRV stock 5% higher.

IBM was on the other side of its earnings report, as the tech company fell 5.6% after its releasing quarterly results . A third straight quarter of decline is not good news for a company in a sector that has been booming.

Watch the video for Jim Cramer’s take on the best stocks to avoid election chaos.

Within the Dow, the top 15 most heavily weighted stocks were higher, with UnitedHealth’s 1.2% gain leading the charge.

Though Apple is no longer the top-dog, it is still a $2 trillion lightning rod for the U.S. stock market, and Tuesday saw it riding high with a 2.2% gain.