Wall Street showed strong momentum to start the day’s session as traders continued to buy the dip with the major indexes breaking out of prior trading ranges — and more in Monday’s stock market update.
The higher close followed Friday’s gains and show cash is moving back into the stock market despite a busy week of economic news and the upcoming presidential debate.
House Speaker Nancy Pelosi, D-Calif., said another coronavirus stimulus plan agreement may be possible as Democrats try to craft a smaller aid package that will cost about $1 trillion less than their initial proposal. However, the price is still more than Republicans have indicated they might accept.
The Russell 2000 rallied 2.4% following the late day push to 1,514.
The Nasdaq surged 1.9% with the afternoon high reaching 11,120.
The S&P 500 jumped 1.6% after tagging a second-half peak of 3,360.
The Dow added 1.5% while testing a midday high of 27,722.
Financials and Energy showed the most sector strength after soaring 2.4%. There were no sector laggards.
Shares of General Motors Co. (NYSE: GM) snapped a six-session slide after trading to an intraday high of $30.04. The company seems to have scored a surprise hit in China with its electric vehicle that sells for less than $5,000. The Hongguang MINI EV, made by SAIC-GM-Wuling Automobile Co., is currently the hottest EV in China, the world’s largest market for cars.
Sales of the compact four-seater topped rival Tesla Inc.’s (Nasdaq: TSLA) models in August, with consumers wowed by its affordable price tag and its ability to run for just over 100 miles on a single charge. Orders exceeded 30,000 units in just 50 days.
Volatility continues to signal choppy trading ranges for the stock market, and will likely continue into the first week of October, when the start of the third-quarter earnings season begins. This might change current nervousness concerning the upcoming presidential election and coronavirus woes. However, it could add even more volatility, bullish or bearish, with a major trend developing into year’s end.
A closer look at the charts from earlier for the major indexes shows breakouts above seven-session trading ranges that follows the previous seven-session trading ranges that had lower lows. Monday’s bounce for the major indexes pushed the lower end of the prior trading ranges from earlier this month.
Given the cycle of current events happening through October, along with Q3 earnings, it will be imperative the major indexes avoid lower lows this week. A close above the 50-day moving averages for the major indexes to end September, along with volatility closing below its 50-day moving average and the 25 level, would be major victories for market bulls.
European markets settled higher across the board with banking stocks leading the charge.
Germany’s DAX 30 zoomed 3.2% and the Belgium20 rocketed 3.1%. France’s CAC 40 rose 2.4% and the Stoxx 600 was higher by 2.2%. UK’s FTSE 100 advanced 1.5%.
Asian markets were mixed following news profits at China’s industrial firms grew, buoyed in part by a rebound in commodity prices and equipment manufacturing.
Japan’s Nikkei and South Korea’s Kospi advanced 1.3% while Hong Kong’s Hang Seng was up 1%. Australia’s S&P/ASX 200 dipped 0.2% and China’s Shanghai slipped 0.1%.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) had its three session winning streak snapped following an intraday pullback to $164.37. Current and upper support at $164.50-$164 was tripped but held. A close below the latter reopens downside risk toward $163-$162.50.
Lowered resistance is at $165-$165.50 and the 50-day moving average.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) settled in the red for the second straight session after trading to a late day low of 24.90. Near-term support at 25.50-25 and the 50-day moving average were breached but held.
Lowered resistance is at 27-27.50 followed by 29-29.50 and the 200-day moving average.
The Invesco QQQ Trust (Nasdaq: QQQ) extended its winning streak to three straight sessions while settling on a peak of $277.20. Lower resistance at $277-$277.50 was cleared and held. Continued closes above the latter would indicate further upside toward the $279.50-280 area.
Fresh support is at $274-$273.50 and the 50-day moving average.
RSI (relative strength indicator) remains in an uptrend with key resistance at 50 clearing and holding. Continued closes above this level signal additional strength toward 55-60. Support is at 45-40 with the latter representing the monthly low.
The iShares MSCI Emerging Markets ETF (NYSE: EEM) was up for the second straight session after testing an opening high of $43.60. New and lower resistance at $43.50-$44 was breached but held. A close above the latter and the 50-day moving average would be an ongoing bullish signal for a retest toward $45-$45.50.
Current support is at $43-$42.50. A close back below the $42 level would be a renewed bearish development with backtest potential toward $41-$40.50 and the 200-day moving average.
Check back for the most important news and numbers each day after the closing bell here in the WealthPress stock market update.