When is a deadline not a deadline? Apparently – and fortunately, for the stock market – when it relates to politicians passing a stimulus deal.
House Speaker Nancy Pelosi on Tuesday walked back her comments setting a hard deadline of today to strike an agreement, but for reasons most investors could get behind. That is, Democrats and the White House are said to be nearing a middle ground in their negotiations, and Pelosi had a 3 p.m. talk set with Treasury Secretary Steven Mnuchin.
Also helping buoy spirits were a few strong results from the third-quarter earnings slate.
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Insurer Travelers (TRV, +5.6%) posted Street-beating profits despite higher-than-usual catastrophe losses. And Procter & Gamble (PG, +0.4%) enjoyed higher demand for cleaning and laundry products, which lifted the company's sales and earnings ahead of estimates.
"PG has been building momentum longer than most of its peers and well before Covid-19 hit, which is one reason we view PG as a post-pandemic winner," writes CFRA analyst Arun Sundaram, who rates PG shares at Buy. "Additionally, the investments PG has made in its brands, capabilities, and organization are just beginning to pay off and should manifest into more market share gains."
The Dow Jones Industrial Average closed up 0.4% to 28,308, while the S&P 500 (+0.5% to 3,443) and Nasdaq (+0.3% to 11,516) also headed to higher ground.
Other action in the stock market today:
- The S&P 500 gained 0.5% to 3,443.
- The Nasdaq Composite improved by 0.3% to 11,516
- The Russell 2000 finished 0.3% higher to 1,618.
- The Justice Department on Tuesday sued Alphabet’s (GOOGL) Google division, filing a 57-page complaint accusing the search giant of violating federal antitrust laws to protect its wide lead in online search. It seemingly had little effect on shares, which gained 1.4%.
What About That Long-Rumored Infrastructure Week?
We mentioned yesterday that, broadly speaking, experts expect a next round of stimulus is likely a matter of when, not if.
"Overall, September's employment report, combined with ongoing virus concerns, should signal to political leaders that the fragile recovery requires additional stimulus as a means to support the labor market," says Charlie Ripley, Senior Investment Strategist for Allianz Investment Management.
But UBS, in a note upgrading its price target on Caterpillar (CAT, +0.9%), from $130 per share to $180, says it has its eye on a particular type of spending: infrastructure.
"We think the increased likelihood of a major infrastructure stimulus is now a function of greater need, as measured by current unemployment levels, and potential for Congressional alignment on funding," analyst Steven Fisher says.
Indeed, infrastructure spending might happen in a second Trump term, though the Democrats' platform is infrastructure-friendly, too, reflected in several so-called Biden stocks. If this kind of spending is indeed in the cards, Caterpillar and other industrial stocks would stand to benefit.
But also keep your eye on mining stocks – miners of commodities such as iron and aluminum could get a boost from either party's infrastructure plan, but additional stimulus spending of any sort could also bolster the price of gold – and the shares of companies who mine it. Read on to discover several types of mining stocks to consider for the months ahead.
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