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Dow Higher as Tech Cuts Losses; US Election Eyed

Published 11/02/2020, 01:27 PM
Updated 11/02/2020, 01:40 PM
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By Yasin Ebrahim

Investing.com – The Dow climbed Monday as tech cut losses and better-than-expected economic data improved investor sentiment ahead of the U.S. election on Tuesday.

The Dow Jones Industrial Average rose  1.49%, or 394 points. The S&P 500 was up 1.10%, while the Nasdaq Composite fell 0.01%.

Ahead of the U.S. presidential election, national polls suggest that former Vice President Joe Biden maintained his strong lead over the weekend against President Donald Trump in key battleground states.

Some suggested that a so-called blue wave – Democrats taking control of the White House and Congress – would prove a short-term gain to the economy as a bigger stimulus package would likely be rolled out, but growth may suffer beyond 2021 amid a possible hike in taxes. 

"In the near-term, we see a blue wave as the most constructive outcome for the economy, with more than $3tn in fresh fiscal stimulus contributing to robust GDP growth to 2021 …  but beyond 2021 time-frame, the implications of a blue wave become much less market friendly," Action Economics said in a note. "Once Democrats have dealt with COVID and the economic fallout, their next policy priority will probably be healthcare expansion financed by tax increases."

The move higher was led by value stocks, as bargain-hunting investors snapped up industrials materials and energy stocks following a rout last week.

Energy rose more than 4% as oil prices cut losses despite lingering concerns about the pandemic impact to demand as several European countries including Germany, France, Belgium, Ireland, Austria and Belgium returned to lockdown.

Tech struggled to get in on the broader move higher as the Fab 5, barring Google-parent Alphabet (NASDAQ:GOOGL), traded lower. Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Microsoft (NASDAQ:MSFT) traded in the red.

In earnings news, Estee Lauder Companies (NYSE:EL) reported fiscal first-quarter results that topped estimates, underpinned by high demand for consumer goods, sending its shares 2% higher.

Clorox (NYSE:CLX), meanwhile, rose 5% after delivering a quarterly earnings beat on strong sales of household goods.

Investor sentiment was also boosted by data showing manufacturing activity hit its highest level in nearly two years.

The Institute for Supply Management said Monday that its manufacturing index rose by 3.9% to 59.3% last month, topping economists' estimates of 55.8.

The seven-day average of new daily cases in the U.S. now the highest the country has seen, at 81,336 cases, the Wall Street Journal reported.

In deal news, Dunkin Brands Group Inc (NASDAQ:DNKN) surged 6% after Inspire Brands announced a $11.3 billion take-private deal for the company.

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