Day Traders Diary

10/1/20

The major averages cut earlier gains to start October as hopes for further fiscal stimulus waned. The Dow Jones Industrial Average rose 35 points to close at 27816. The S&P 500 closed up 17 points at 3380. The Nasdaq Composite outperformed, rising 1.4% to 11,326.

The Dow turned red just as House Majority Leader Steny Hoyer's office sent out a notice that the House was expected to vote on the Democrats' stimulus bill Thursday. Traders were hoping lawmakers would keep delaying that vote in a sign that progress was being made with Republicans on a bipartisan package.

The market was supported by hopes that despite the public jockeying back and forth, lawmakers would eventually work a bill out. Tech shares, which could do well even without another stimulus, also gained, helping the S&P 500.

The House, which aimed to pass a $2.2 trillion Democratic bill Wednesday night, had delayed a vote to allow more time for House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin to hash out a bipartisan plan.

Pelosi and Mnuchin held a phone call Thursday after they failed to strike a deal during a Wednesday meeting.

Major technology shares provided the broader market with some support as Amazon, Microsoft, Alphabet and Facebook all jumped at least 1%.

Mixed economic data also kept sentiment in check. U.S. manufacturing activity slowed in September as a purchasing manager's index fell to a reading of 55.4 from 56 in August, according to the Institute for Supply Management.

The weekly jobless claims report came in better than expected, however. The Labor Department said first-time filers for unemployment benefits tallied 837,000 in the week ending Sept. 26. Economists polled by Dow Jones expected a total of 850,000.

The major averages are coming off their first down month since March. The 30-stock Dow lost 2.2% in September, a typically weak month for equities. The S&P 500 fell 3.9% for the month, while the technology-heavy Nasdaq Composite dropped 5.2%.

However, all three benchmarks achieved strong gains for the third quarter. The S&P 500 rose 8.5% in the quarter for its sixth positive quarter in seven and the index is up 5% for the year.