stocks

Stock Market Today: White House Flip-Flop Sends Stocks Higher

Stimulus hopes were resuscitated Tuesday evening, mere hours after they were dashed, prompting a strong Wednesday rebound in the major stock indices.

If your neck is aching right now, it's likely from keeping up with the back-and-forth fate of COVID stimulus talks, which are changing literally every few hours at this point.

We reported Tuesday that President Donald Trump directed his team to pull out of negotiations, effectively killing any hopes of stimulus before the Nov. 3 elections. An afternoon market drop and just a few hours of surprised conjecture later, Trump pulled a 180, calling for more of a piecemeal strategy and saying he'd be ready to sign a standalone bill for stimulus checks "right now." 

And on Wednesday, the Federal Open Market Committee released its September-meeting minutes, which revealed very little that Wall Street didn't already know or expect. But they did show that many on the Fed believe it can't wage an economic fight against COVID alone.

"It remains unclear as to whether the Fed will need to provide incrementally more monetary stimulus," says Bob Miller, BlackRock's head of Americas Fundamental Fixed Income. "What is clearer, however, is the Committee member's revealed preference that fiscal policy is the optimal response to generate more targeted stimulus from here. Indeed, Chair Powell again reiterated that view in his speech this week."

Airline stocks rebounded from yesterday's losses, with the likes of Southwest Airlines (LUV, +2.7%) and United Airlines (UAL, +4.3%) jumping at news that a standalone package for the industry is back in play after it had been shot down last week.

And while there's still no way to tell what might get passed between here and November, the revival of hope was enough to send the major indices to broad, sharp gains today. The Dow Jones Industrial Average popped by 1.9% to 28,303, led by Salesforce.com (CRM, +3.9%) and Boeing (BA, +3.2%). Strong performances from Amazon.com (AMZN, +3.1%) and Netflix (NFLX, +5.7%) helped lead the Nasdaq Composite 1.9% higher to 11,364.

Other action from the stock market today:

  • The S&P 500 gained 1.7% to 3,419.
  • The small-cap Russell 2000 shot 2.3% higher to 1,612.
  • West Texas Intermediate (WTI) crude oil prices settled 1.8% lower to $39.95 per barrel.

Get More Than Defense Out of Your Defensive Holdings

"Right now we have to live with the day-to-day headlines that are causing stocks to swing both up and down," says Scott Wren, senior global market strategist at the Wells Fargo Investment Institute. "Equity markets are going to continue to be very sensitive to news with the potential to affect consumer spending since nearly 70% of economic activity in the U.S. is tied to all of us opening our wallets and purchasing goods and services."

With volatility and uncertainty almost a given right now, investors are likely to look for protection in defensive stock sectors such as utilities or even other assets such as gold and gold funds.

That's fine for investors who are happy to make portfolio tweaks whenever the market swings. However, those looking for buy-and-hold solutions with naturally defensive properties might want to consider health care stocks.

Health care products and services can rarely take a back seat to other expenses, and ever-advancing treatments for an aging population are fueling growth, making the sector an all-weather play. So read on as we explore five great health care funds that not only provide exposure to industries such as pharmaceuticals, biotech and medical devices – but do so via diversified baskets that protect you against single-stock shocks.

Kyle Woodley was long AMZN and LUV, as well as CRM call options, as of this writing.

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