Dow rises 150 points, heads for best week since August as investors monitor stimulus talks

U.S. stocks rose Friday to end a strong week as Wall Street continued to search for clarity surrounding a new potential stimulus bill.

The Dow Jones Industrial Average traded 150 points higher, or 0.5%. The S&P 500 and Nasdaq Composite gained 0.8% and 1.2%, respectively.

The major averages hit their session highs after President Donald Trump tweeted: “Covid Relief Negotiations are moving along. Go Big!”

CNBC’s Ylan Mui also reported the administration has raised its offer for a new aid package to $1.8 trillion from $1.6 trillion. Trump later said he “would like to see a bigger stimulus package frankly than either the Democrats or Republicans are offering.”

Friday’s gains put the major averages on pace for solid weekly advances. The Dow is up 3.2% week to date, on pace for it biggest one-week gain since August. The S&P 500 and Nasdaq are up 3.8% and 4.3%, respectively, for the week. 

Trump’s comments came a day after the administration and Democrats sent mixed messages regarding future aid.

House Speaker Nancy Pelosi, D-Calif.,  told reporters on Thursday she would not back aid to U.S. airlines without a broader stimulus package, something Trump hinted earlier in the week he’d support. Meanwhile, Trump told Fox Business on Thursday morning that the administration and Democrats were “starting to have some very productive talks.”

“Stimulus talks are really dictating the market action on a day-to-day basis,” said Keith Buchanan, portfolio manager at GLOBALT. Buchanan noted that the recent rhetoric indicates some progress in the negotiations, but added it is key for Washington to move “quickly” on the matter to “relieve the pressure that the economy is under.”

The Federal Reserve and U.S. lawmakers have spent trillions of dollars on various measures to keep the economy afloat during the pandemic. Earlier this year, the Fed launched an open-ended bond-buying program and Trump signed a $2.2 trillion package that included enhanced unemployment benefits and direct payments to Americans. However, economic experts — as well as the Fed — have urged the government to push through more aid as it would sustain the recent economic recovery. 

Carl Icahn, billionaire investor and chairman of Icahn Enterprises, said Thursday night these measures have been “very effective” for the economy and the market. 

“If you look at stock prices, I think some of them are ridiculously high but going short on them proves to be a very, very expensive operation,” Icahn said at the 13D Monitor Active-Passive Investor Summit. “A lot of those stocks you believe are tremendously overpriced just keep going up. So basically, I think the stimulus is doing the trick.”

“At this juncture, I’m net long because I believe that this stimulus is coming and it’s going to continue, especially after the election,” he said. 

Cruise operator stocks jumped after the White House announced Vice President Mike Pence will meet with industry officials later in the day. Carnival and Norwegian Cruise Line were up 1.5% and 3.6%, respectively. Royal Caribbean gained 3.1%.

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