Commenting on the possibility for a coronavirus stimulus deal before elections and today’s trading Gorilla Trades strategist Ken Berman said:
The major indices are all trading higher at midday as the broad-based rally continues for the third day in a row on Wall Street. The ongoing stimulus talks continue to dominate the short-term trends in risk assets, and the fact that Treasury Secretary Mnuchin and House Speaker Pelosi reportedly resumed negotiations gives bulls hope that a stimulus deal might be struck before the elections.
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A Coronavirus Stimulus Deal In The Works?
While small-caps have been relatively strong once again overnight, and the Russell 2000 hit another seven-month high, the large-cap benchmarks performed better in the second half of the morning session.
The domestic economic calendar was virtually empty this morning but the much better-than-expected Italian industrial production report gave a boost to global risk assets and the euro, in particular, overnight. The dollar hit its lowest level in more than three weeks amid the risk rally and that has been helping the most export-focused focused firms and the Nasdaq in early trading following several days of relative weakness. Precious metals and copper also hit multi-week highs amid the coronavirus stimulus deal related speculation and more and more investors seem to be betting on a strong 2021 for the global economy.
Dow: 28,564, + 139 or 0.5%
S&P 500: 3,470 + 23 or 0.7%
Nasdaq: 11,537, + 116 or 1.0%
Russell 2000: 1,633, + 4 or 0.3%
Market breadth has been relatively weak this morning, with advancing issues only outnumbering decliners by a 5-to-4 ratio on the NYSE at midday. Only 7 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 215 stocks hit new 52-week highs. The major indices have been hovering around their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to a choppy and mixed afternoon. The performance of the key sectors has been less uniform compared to yesterday this morning, as energy stocks, utilities, and the real estate sector all lost some ground, but the strength among consumer-related issues and tech stocks should be enough to keep the major indices in the green. Stay tuned!