It was a choppy start to the first day of a new month and quarter, with stocks displaying weakness at the open.
However, the major market indexes turned higher after the Institute for Supply Management's (ISM) manufacturing index – a measure of factory activity – came in at a higher-than-anticipated 61.1 in September, and the University of Michigan's consumer sentiment index for the same month also beat the consensus estimate (72.8 actual vs. 71.0 expected).
The Dow Jones Industrial Average easily outperformed its peers, adding 1.4% to 34,326, on strength from Merck (MRK, +8.4%).
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The drugmaker got a big boost after late-stage data showed its antiviral pill, co-developed with Ridgeback Biotherapeutics, reduced the chance of death or hospitalizations by around 50% in high-risk COVD-19 patients. The firms plan to submit the results to the Food and Drug Administration (FDA) for emergency authorization.
The S&P 500 Index gained 1.2% to 4,357 and the Nasdaq Composite rose 0.8% to 14,566.
Other news in the stock market today:
- The small-cap Russell 2000 surged 1.7% to 2,241.
- Several makers of COVID-19 vaccines fell in reaction to the promising data from Merck. Moderna (MRNA) gave back 11.4%, Regeneron Pharmaceutials (REGN) fell 5.7% and BioNTech (BNTX) slumped 6.7%.
- Lordstown Motors (RIDE) was also a notable decliner today, sliding 18.3%. This came after the electric vehicle (EV) maker late Thursday said it agreed in principle to sell its Ohio-based assembly plant to iPhone maker Foxconn for $230 million. As part of the deal, Foxconn will manufacture the vehicle maker's all-electric pickup truck and purchase roughly $50 million of RIDE common stock. Lordstown, meanwhile, will now be able to focus its efforts on bringing the vehicle to market, said CEO Daniel Ninivaggi in a statement.
- U.S. crude oil futures rose 1.1% to finish at $75.88 per barrel.
- Gold futures eked out a marginal gain to settle at $1,758.40 an ounce.
- The CBOE Volatility Index (VIX) spiraled 8.6% to 21.15.
- Bitcoin prices gained 10.4% to $48,071.09. "Today's spike is directly correlated to news out of Washington," says Charlie Silver, CEO of Permission.io, a cryptocurrency-enabled provider of e-commerce permission advertising. "Most importantly in direct opposition to recent Chinese announcements, Fed Chair Jerome Powell made it clear that the dollar can coexist with cryptocurrencies. In addition, all the discussion around eliminating the debt ceiling also fuels the animal spirits in crypto." (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
Don't Let October Scare You
You wouldn't know it by today's action, but October can be pretty spooky for stocks.
"October is known for some spectacular crashes and many expect bad things to happen again this year," says Ryan Detrick, chief market strategist for LPL Financial. "No month has seen more 1% moves (up or down) than October, with some of the largest one-day moves (both up and down) taking place this month."
And with the S&P 500 failing to have a 5% pullback yet this year – it came close with its 4.8% September decline – it's understandable if investors are skittish.
However, Detrick notes that the fourth quarter is historically bullish for stocks, so if we do see any more weakness, it should be used as an opportunity "to add to core positions."
There are plenty of options for investors who may want to put together their wish list now, including these high dividend payers or these sturdy blue chips. There's also our Kiplinger 25, which is perfect for investors looking to build a core portfolio. This list of 25 mutual funds offer easy diversification across a wide range of issues, and they all have solid long-term records with attractively low fees. Check them out.
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