US Stocks Close Higher as Stimulus Talks Progress but Still Post First Monthly Loss in 6-Months

The major U.S. stock indexes finished sharply higher on Wednesday as government leaders continued to try to hammer out a new coronavirus stimulus package and better-than-expected positive economic data helped stocks recover some of its monthly losses while solidifying its quarterly gains.

While the futures markets traded sharply lower during the premarket session in reaction to the first presidential debate, the cash market indexes surged on the opening after U.S. House of Representative Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin both expressed hope for a breakthrough in partisan stimulus negotiations.

But the indexes pared their gains late in the session after Senate Majority Leader Mitch McConnell warned the sides remain “far apart” in their talks. This implied there may not be a deal until after the November 3 election.

In the cash market on Wednesday, the benchmark S&P 500 Index settled at 3363.00, up 27.53 or +0.81%. The blue chip Dow Jones Industrial Average finished at 27781.70, up 329.04 or +1.18% and the tech-based NASDAQ Composite closed at 11167.51, up 82.26 or +0.74%.

The major indexes wrapped up September with their first monthly declines since March, when mandated shutdowns slammed the economy, but still managed to post strong quarterly gains.

Little Impact from Debate, but Economic Data Saves the Day

Although the indexes dropped sharply after the two presidential candidates squared off on Tuesday evening, most investors gleaned nothing fresh after digesting Tuesday’s contentious presidential debate, where President Donald Trump and Democratic rival Joe Biden talked over each other and traded insults as they spared over the COVID-19 pandemic, healthcare and the economy.

Investors seemed to put concerns over the debate early Wednesday after a spate of economic data mostly surprised to the upside, with the ADP National Employment Index topping analyst expectations and pending home sales jumping to an all-time high.

Sectors and Stocks

Of the 11 major sectors in the S&P 500, 10 ended the session in positive territory, with healthcare and financials enjoying the largest percentage gains.

Nikola Corp stock soared by 14.5% after Chief Executive Mark Russell said he was close to a deal with an energy partner and defended the company against a short-sellers fraud allegations.

Micron Technology Inc said it has not yet obtained new licenses needed to sell memory chips to China’s Huawei Technologies Co Ltd, sending its shares down 7.4%.