The market received encouraging news from the most recent unemployment-benefits figures Thursday, which showed a better-than-expected 837,000 initial claims, down from 873,000 a week prior. But "the most important immediate question for the market remains that of stimulus," BCA Research says in a recent note, and Thursday's session, much like Wednesday's, reflected that.
Stocks wobbled at the start of October as final hopes for another stimulus measure ahead of the November elections swayed in the wind. House Speaker Nancy Pelosi reportedly expressed pessimism to her Democratic team about the prospects for reaching an agreement, with the House and White House plans currently several hundreds of billions of dollars apart.
"While the question of the timing of stimulus is important so is its size." BCA Research says. "We posit that the market anticipates a package of around $1.3-$1.5 trillion, near the Senate GOP's proposal. Hence, if no deal is reached by mid-October, or a smaller deal than this amount is agreed, risk assets will sell off. However, if the ultimate deal looks closer to the Democrats' $2.3 trillion plan, then stocks can rally."
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(The Kiplinger Letter, for the record, is forecasting no stimulus deal until after the election.)
The Dow Jones Industrial Average, which fell into negative territory at one point, closed 0.1% in the black to 27,816. Investors were much more bullish about the prospects for tech and communication plays such as Netflix (NFLX, +5.5%) and Facebook (FB, +1.8%), which buoyed the Nasdaq Composite by 14% to 11,326.
Other action in the stock market today:
- The S&P 500 gained 0.5% to 3,380.
- The small-cap Russell 2000 jumped 1.6% to 1,531.
- United Airlines (UAL, +1.2%) and American Airlines (AAL, +2.4%) both gained on the back that they plan to furlough a combined 32,000 workers.
- Playboy will become the latest name to go public via a SPAC (special purpose acquisition company). The company will merge with Mountain Crest Acquisition Corp. and trade on the Nasdaq under the ticker "PLBY."
Anything Goes in October
If the month of October could dress up for Halloween, it likely would suit up as Dr. Jekyll and Mr. Hyde.
"This month has tricks and treats for nearly everyone," says LPL Financial chief market strategist Ryan Detrick. "Over the past decade, it ranks as the second-best month of the year, while it is the worst month of the year during an election year. It is known for crashes like in 1929, 1987, and 2008, but overall the month is actually not that bad, ranking as the seventh-best month since 1950."
That's not to say short-term tactics are completely off the board – investors willing to wager on the election results could load up on "Trump stocks" or "Biden stocks." But this month might be best spent focusing on your long game.
Consider adding some stabilizing income via utility stocks, for instance, or buy uber-long-term dividend growth on the cheap with these 15 bargain-priced Dividend Aristocrats.
And while bonds aren't quite the ample cash gushers they used to be, they can still serve a wide variety of purposes. Read on as we evaluate 15 great bond funds – and explain how they're best used, by which kinds of investors.
Kyle Woodley was long FB as of this writing.
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