finance

Dow closes 160 points higher, posts best week since August as investors monitor stimulus talks


Stocks rose on Friday to end their best week in months as President Donald Trump signaled support for a bigger coronavirus aid package. 

The Dow Jones Industrial Average closed 161.39 points higher, or 0.6%, at 28,586.90. The S&P 500 gained climbed 0.9% to 3,477.13. The Nasdaq Composite advanced 1.4% to close at 11,579.94.

Microsoft and Salesforce led the Dow higher, rising 2.5% and 2.2%, respectively. Consumer discretionary and tech were the best-performing S&P 500 sectors, advancing more than 1% each. 

For the week, the Dow jumped 3.3% and posted its biggest one-week gain since August. The S&P 500 and Nasdaq were up 3.8% and 4.6%, respectively, for the week. Both benchmarks had their best weekly performance since early July. 

Trump tweeted on Friday that “Covid Relief Negotiations are moving along. Go Big!”

CNBC’s Ylan Mui reported the administration has raised its offer for a new aid package to $1.8 trillion from $1.6 trillion. However, Trump later told radio talk show host Rush Limbaugh that he “would like to see a bigger stimulus package frankly than either the Democrats or Republicans are offering.”

To be sure, Senate Majority Leader Mitch McConnell said it is “unlikely” that a new aid package would be passed in the three weeks prior to the Nov. 3 election.

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. 

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