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Dow Rides Stimulus Hopes to Biggest Weekly Gain Since August

Stock MarketsOct 09, 2020 04:06PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The Dow notched its best week since August on Friday, as hopes for further fiscal aid to keep the economy on track were boosted on reports the White House raised its coronavirus stimulus offer to $1.8 trillion, though that is still short of the Democrat’s $2.2 trillion proposal.

The Dow Jones Industrial Average rose 0.57% or 161 points, and had its best week since the week ending Aug. 7. The S&P 500 ended 0.88% higher, while the Nasdaq Composite gained 1.39%, with indexes notching their biggest gains since the week ending July 3.

Treasury Secretary Steven Mnuchin is expected to discuss the new $1.8 trillion proposal with House Speaker Nancy Pelosi when the two speak Friday, The Wall Street Journal reported, citing sources.

Earlier on Friday, Senate Majority Leader Mitch McConnell said another fiscal package was unlikely in the next three weeks, while Trump said he wanted to see a larger relief bill than either side had offered so far.  “I’d like to see a bigger stimulus package than either the Republicans or Democrats are offering,” Trump said on Rush Limbaugh radio show. “I’d like to see money going to people.”

Reports the White House is raising its offer comes a day after Pelosi rejected the idea of passing standalone aid bills, preferring instead to roll out a broader relief package that would include support for individuals, small businesses and airlines.

Economists have repeatedly highlighted the importance of fiscal aid to keep the recovery intact, though have recently suggested that possible delays could eventually lead to a larger deal.

"The lack of additional fiscal support will create downside momentum for economic activity in the fourth quarter ... but it is not necessarily bad news. More stimulus is coming in early 2021, and the odds are that it will be bigger than would otherwise be the case," Jefferies (NYSE:JEF) said. 

Sectors tied to the progress of the economy advanced. Consumer discretionary was among the gains eBay (NASDAQ:EBAY) and Etsy (NASDAQ:ETSY) easing leading the upside.

Big tech continued to add to gains, led by a more than 2% rise in Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN). Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL) rose 1%, while Facebook (NASDAQ:FB) ended marginally higher.

Energy proved an exception to the rally, down more 1%, as oil prices fell 1%, though are set to end the week sharply higher with weather-related supply disruptions easing demand concerns somewhat.

Tech was also pushed higher by a rise in chip stocks after strong gains in NXP Semiconductors NV (NASDAQ:NXPI) and Xilinx (NASDAQ:XLNX), with the latter ending 14% higher on reports that Advanced Micro Devices (NASDAQ:AMD) was in advanced talks to buy the company.

NXP Semiconductors NV (NASDAQ:NXPI) closed up 5% as it lifted quarterly guidance, citing a “material improvement” in demand across all end markets.

In other news, General Electric (NYSE:GE) ended nearly 3% higher after Goldman Sachs said the conglomerate will emerge stronger from the pandemic and reinstated its coverage on the stock with a $10 price target. 

Dow Rides Stimulus Hopes to Biggest Weekly Gain Since August
 

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Comments (19)
Stephen Short
Stephen Short Oct 10, 2020 2:00AM ET
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Next week's headline will be "Dow Rides Dashed Stimulus Hopes Down in Biggest Weekly Drop Since August 2019"
sean lxx
seanlxx Oct 09, 2020 11:28PM ET
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Hope makes America great again!
king michael
king michael Oct 09, 2020 8:56PM ET
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Stimulus is just an excuse to lure more small players into the market so that big players can unload. But It is a good time to profit as long as you set proper stop limit. Market will very likely crash before election day. Should get out of market about a week before 11/3.
Micah Funk
Micah Funk Oct 09, 2020 8:56PM ET
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Or buy HTZ! lol
New Jazenevd
New Jazenevd Oct 09, 2020 7:24PM ET
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Stimulus hopes aside, it is just a figure of speech anyway, market will likely make new all-time high before next mini shake-off. It is less than 4% from all time highs and so it will all happen quickly enough. In longer term, it depends partially on election results. In most scenarios bull market stays intact.
king michael
king michael Oct 09, 2020 7:21PM ET
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President is the desperate one to have a stimulus deal or he may just quite. But if his offer is too close to the asking of $2.3 trillion, he also lose. The other side can cut a much bigger stimulus after the election anyway if Trump lose. To the other side there is no rush with only two more weeks left.
Raksaksa Tonne
Raksaksa Tonne Oct 09, 2020 7:17PM ET
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The market is in stimulants, not stimulus.
Stephen Short
Stephen Short Oct 09, 2020 7:17PM ET
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Well said!
Raksaksa Tonne
Raksaksa Tonne Oct 09, 2020 7:16PM ET
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Congratulations to the Fed for destroying the market mechanism forever. From now on, we don't need analysts or economists or valuations or whatever, since the market is just the ****up doll of the Fed.
Samy VM
Samy VM Oct 09, 2020 6:27PM ET
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I see HOPES everywhere on here!!! the economy is going down .... And hopes up
Samy VM
Samy VM Oct 09, 2020 6:23PM ET
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Please!!!! Again HOPES ???!!! Don't have you something else to say???
freedom byforce
freedom byforce Oct 09, 2020 6:08PM ET
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economist know that every stimulus bill they pass is another nail in the coffin of America. ashame that the promote the idea.
Lakshmana Reddy
Lakshmana Reddy Oct 09, 2020 5:10PM ET
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If bill pass then 30K🤣dow
New Jazenevd
New Jazenevd Oct 09, 2020 5:10PM ET
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30k Dow is only 5% to go from now. It will be reached anyway, before or after stimulus bill passed.
New Jazenevd
New Jazenevd Oct 09, 2020 5:07PM ET
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In most scenarios (political ones) market will stay strong over upcoming winter season. Both parties are committed to “stimulus” policies that means stronger market.
Show previous replies (2)
New Jazenevd
New Jazenevd Oct 09, 2020 5:07PM ET
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freedom byforce  Just to make it clearer. Market can become strong by various reasons. However, if it becomes strong, then it is strong, no matter what the reason was or whether you like the reason or not.
Robert Cox
Robert Cox Oct 09, 2020 5:07PM ET
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A strong market relies on underlying fundamentals for its foundation. Its strength is a product of companies announcing innovations and projects that add value to the company and, ultimately, the market. An increasing market is one that is artificially inflated by pumping up prices without the underlying values, the very definition of a bubble. This is the latter, not the former.
New Jazenevd
New Jazenevd Oct 09, 2020 5:07PM ET
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Robert Cox  I already addressed it in another reply. Market can become strong by various reasons. However, when it is strong then it is strong. You may not like the reason; however, market will be strong anyway. Your dislike cannot cancel strong market.
Robert Cox
Robert Cox Oct 09, 2020 5:07PM ET
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Your response was just a rehash of the first nonsensical comment. A market does not become strong because a few players push in their chips and call it such. It becomes strong because the underlying forces are strong. Strong markets don't pray for government intervention; they abhor it.
New Jazenevd
New Jazenevd Oct 09, 2020 5:07PM ET
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Robert Cox  It seems you do not possess practical grasp of market. The latter is for making capital gains, not for hollow musings about social justice. When market yields strong gains for investors then it is called “strong market”. Understood?
Francesc Piñol Lopez
Francesc Piñol Lopez Oct 09, 2020 5:01PM ET
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The winter is coming...
Nikolai Nikolaichev
Nikolai Nikolaichev Oct 09, 2020 4:42PM ET
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Just wait until next tweet “there will be no agreement on stimulus!” And buy low again.
New Jazenevd
New Jazenevd Oct 09, 2020 4:42PM ET
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Most likely, new lows will be higher than old lows.
Jyoti Tavhare
Jyoti Tavhare Oct 09, 2020 4:35PM ET
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yaa I liked sentence.. money going to people
Robert Alex
Robert Alex Oct 09, 2020 4:32PM ET
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Profits will be taken soon, FOMO boys will be caught holding the bag. Anyone paying attention know the stimulus talks are political theater.  I think I prefer the "hopes of a vaccine" rallies compared to this.
New Jazenevd
New Jazenevd Oct 09, 2020 4:25PM ET
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Gains are good if you make them.
Attila Bakk
Attila Bakk Oct 09, 2020 4:24PM ET
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The big short
Steffen vdm
Steffen vdm Oct 09, 2020 4:19PM ET
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Nasdaq up almost 10% in two weeks time. This is bonkers!
Plopseven Schwartz
Plopseven Schwartz Oct 09, 2020 4:19PM ET
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The volume is extremely worrying
 
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