US stocks shake off wobbly start, end mostly higher

AP – United States (US) stock indexes closed mostly higher on Friday, though the S&P 500 posted its first weekly loss in four weeks.

The benchmark index eked out a 0.3 per cent gain after another day of wobbly trading. The Dow Jones Industrial Average finished with a small loss. Gains in communication services, healthcare and other sectors outweighed a decline in technology and energy companies.

Treasury yields remained near their highest levels since June.

The indexes bounced between small gains and losses after a sluggish start as investors weighed another batch of corporate results from the summer earnings period. The up-and-down moves have been a familiar pattern recently as traders keep an eye on the ongoing negotiations between Republican and Democractic leaders in Washington over more economic aid for the pandemic-stricken economy.

“It’s generally been a little more of a selling market, and a lot of that has to do with waiting to see whether or not we get a fiscal stimulus package before the election,” IndexIQ Chief Investment Officer Sal Bruno said. “The odds of that are getting lower and lower the closer we get to the election.”

Pedestrians walk past the New York Stock Exchange. PHOTO: AP

The S&P 500 rose 11.90 points to 3,465.39, its second straight gain. The Dow Jones Industrial Average dropped 28.09 points, or 0.1 per cent, to 28,335.57. The Nasdaq composite, which is heavily weighted with technology stocks, gained 42.28 points, or 0.4 per cent, to 11,548.28. The index had been down 0.6 per cent.

Small company stocks continued to best the rest of the market. The Russell 2000 index rose 10.25 points, or 0.6 per cent, to 1,640.50. The index ended the week with a 0.4 per cent gain, while the major US indexes fell.

Stocks have been mostly pushing higher this month after giving back some of their big gains this year in a sudden September swoon. Before this week, the S&P 500 had notched a weekly gain three weeks in a row. It is now up three per cent for the month heading into the final week of October.

Investors are hoping for another round of government aid for businesses and millions of people who have lost their jobs during the coronavirus pandemic. The last round of supplemental aid for unemployed Americans expired at the end of July.

White House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been negotiating daily this week on a possible aid package. On Thursday, Pelosi said progress is still being made, but any compromise will likely face stiff resistance from Republicans in
the Senate.

Wall Street is worried that if an agreement on more economic aid is not reached before the November 3 election, it could leave the matter in limbo should there be a protracted delay in sorting out the outcome of the voting.

“You have political incentives going on right now to try and get something done,” Bruno said. “Once the election has passed, depending on the outcome, maybe some of those political incentives shift. It scrambles the deck quite a bit.”

In their debate on Thursday, US President Donald Trump and his Democratic challenger Joe Biden managed a more substantive exchange than during their first raucous clash several weeks ago. There were no major market-moving surprises.

“The final US presidential debate was less chaotic than the first but offered little new information to inform the result for markets,” Stephen Innes of Axi said in a commentary. “Meanwhile, discussion relevant to the post-election economic outlook was limited, particularly from President Trump.”

Uncertainty over whether Uncle Sam will provide more support for the economy was overshadowing solid earnings reports from big companies. While many reported profits for the summer that took a hit from the coronavirus-caused recession, their results have been mostly not as bad as feared.

Barbie maker Mattel jumped 9.6 per cent after its latest earnings blew past analysts’ forecasts. Capital One Financial gained 1.6 per cent after turning in robust results.

Some companies’ results did not live up to Wall Street’s expectations. American Express fell 3.6 per cent and chipmaker Intel sank 10.6 per cent, the biggest decline in the S&P 500, after reporting weakness in its data centre business. Intel’s drop helped pull the Dow into the red.

Drugmaker Gilead rose 0.2 per cent after US regulators gave formal approval to its antiviral drug remdesivir to treat patients hospitalised with COVID-19.

Treasury yields dipped but remain near their highest levels since June. The 10-year Treasury yield slipped to 0.84 per cent from 0.87 per cent on Thursday.

The recent pickup in bond yields follows recent encouraging data on residential construction, homebuying and retail sales. It also suggests bond investors are more optimistic that the economy will receive more aid from Washington.

Markets in Europe closed higher, and Asian markets mostly rose.