Stocks rise, but are off their highs after Pelosi rejects idea of smaller airline aid package
Stocks gave back most of their initial gains on Thursday after comments from House Speaker Nancy Pelosi dampened sentiment around a potential smaller coronavirus aid package.
The Dow Jones Industrial Average traded just 15 points higher, or 0.1%, after being up as much as 155 points. The S&P 500 was also off its high, trading higher by 0.4%. The Nasdaq Composite cut gains and was up 0.3%.
Pelosi, D-Calif., told reporters there will not be a stand-alone stimulus bill for airlines — something President Donald Trump had pushed for the day before — without a bigger aid package.
United Airlines was down 0.3% and American Airlines slid 0.5%.
Earlier in the day, stocks were up after President Donald Trump said that the administration and Democrats were “starting to have some very productive talks.” His comments came after he urged lawmakers to push through coronavirus aid for airlines, sparking a massive market rally on Wednesday. (Click here for the latest news on the coronavirus.)
The Dow had its best day since mid July on Wednesday, rallying more than 1%. The S&P 500 and Nasdaq were also up more than 1% during the previous session.
“Even though there is uncertainty now about the fiscal stimulus negotiations, regardless of who wins the election, we are likely to have additional fiscal stimulus,” said Nancy Davis, founder and portfolio manager at Quadratic Capital.
“With the uncertainty, I think it’s important for investors to have a diversified portfolio, with investments that are uncorrelated to each other. We should expect more uncertainty going forward,” she added.
Investors also digested the latest U.S. weekly jobless claims data on Thursday, which showed an additional 840,000 Americans filed for unemployment benefits for the first time. Economists polled by Dow Jones expected first-time claims for unemployment insurance to total 825,000 for the week ending Oct. 3.
The major averages are higher for October, clawing back some of September’s losses, which was the first negative month since March. Still, a host of risks remain in the market, including rising Covid-19 cases around the world, as well as a slowdown in the rate of the economic recovery.
“The risks we are now facing—medical, economic, and political—have waxed and waned over the year, so a difficult quarter will be nothing new,” noted Brad McMillan, Chief Investment Officer for Commonwealth Financial Network. “In fact, after the election, there is a good chance next year will look much better. We will have to wait and see, but for the moment, be prepared for volatility — but remember that it will pass,” he added.
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