Stocks rose Monday, as investors expected a strong earnings season and a fiscal stimulus deal, both of which can show investors the economy is recovery at a fast pace.
The S&P 500 rose 0.45%, with the tech-heavy Nasdaq up 0.7%. The 10-Year Treasury yield rose to 0.77% from 0.74%. Yields rise when prices fall.
Speaker Pelosi said over the weekend the White House should have 48 hours to prepare a stimulus deal. Investors want to see stimulus to small businesses and households sooner rather than later, as a deal sooner saves more businesses and people as unemployment is still high and businesses are still cash-strapped and not fully opened.
"The possibility of a fresh fiscal stimulus shot in the U.S. – the world’s largest economy - is acting as a catalyst in driving global stocks higher,” wrote Nigel Green CEO of deVere Group. "Investors are moving now to buy stocks to bolster their portfolios ahead of the announcements in the coming days when prices will jump even higher – so they’re taking advantage of what they see as the current lower entry points.”
"We also woke up this morning to renewed hopes for a stimulus bill, fueled by an accelerated rise in new cases, which in a backwards sort of way translates into a positive for the market,” wrote Chris Larki, Managing Director of Trading and Investment Product at E*Trade.
Most sectors rose, albeit some of them just a few tenths of a percentage point. Investors want to see a broad market rally, which indicates the gains aren’t concentrated in industry-specific drivers, but rather macroeconomic confidence.
Earnings for the third quarter are also rolling in and are widely expected to beat estimates. Earnings are expected to fall by about 20% year-over-year for the quarter, but more beats — which we saw in the second quarter — points to earnings growth in 2021 and the continued rapid recovery.
In oil, ConocoPhillips (COP) - Get Report is buying Concho Resources (two oil drillers) for $9.7 billion in all stock. This comes as oil prices have been down all year amidst pandemic-related uncertainty. Oil drillers are looking to consolidate and bring prices up. The $36 billion by market cap ConocoPhillips initially rose more than 1% to $34 a share, before dipping a similar amount.