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James Hyerczyk
US Stocks

The major U.S. stock indexes rose on Thursday in a choppy, two-sided trade, as investors remained optimistic that U.S. policymakers would reach a deal on more fiscal stimulus to support a pandemic-damaged U.S. economy before the November 3 elections.

The intraday rally was impressive because investors were facing an early setback after President Trump said Democrats were holding out for too much, suggesting he was preparing to blame them for the demise of a deal.

Despite the President’s negative tone, House speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin continued negotiating a relief bill near the $2 trillion mark, a sum opposed by Senate Republicans who have expressed concerns about the federal deficit.

In the cash market on Thursday, the benchmark S&P 500 Index settled at 3453.49, up 17.93 or 0.53%. The blue chip Dow Jones Industrial Average finished at 28363.66, up 152.84 or +0.55% and the tech-driven NASDAQ Composite closed at 11506.11, up 21.32 or +0.19%.

Volatility Remains at Heightened Levels

The CBOE Market Volatility Index rose for the eighth time in nine sessions, and was last up 2% for the session. With the VIX still hovering around 30, option traders are still pricing in near-term market turbulence for U.S. markets.

Investors should be asking themselves, is the VIX rising because of the prospect of additional fiscal stimulus? Are investors pricing in the possibility of a stock market crash? I they worried about the election results? What about a potential third wave of the coronavirus.

Given all of these factors, a rising VIX, which is also known as a fear gauge, means investors are buying puts for protection against an unknown. They probably fell it is a cheap way to buy insurance rather than exist stock positions then try to re-enter later.


Sectors and Stocks

Energy and financials rose 2.6% and 1.6%, respectively, the steepest percentage gainers among the major S&P sectors.

Tesla Inc climbed 2.0% after the electric-car maker reported its fifth consecutive quarterly profit on record revenue of $8.8 billion.

Chipotle Mexican Grill Inc fell 4.7% as it posted a drop in quarterly profit, hurt by higher beef prices, delivery costs and coronavirus-related expenses.

Coca-Cola Co gained 1.3% as it beat quarterly result expectations, while chemicals maker Dow Inc fell 0.6% even as it surpassed quarterly profit estimates.

The Internals

About a fifth of S&P 500 companies have reported third-quarter results of which 84.1% beat earnings estimates, according to IBES Refinitiv data.

Advancing issues outnumbered declining ones on the NYSE by a 1.82-to-1 ratio; on NASDAQ, a 1.72-to-1 ratio favored advancers.

The S&P 500 posted 17 new 52-week highs and 1 new low; the NASDAQ Composite recorded 48 new highs and 27 new lows.

For a look at all of today’s economic events, check out our economic calendar.
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