Stock Market Update

[BRIEFING.COM] The stock market had a solid showing on Election Day. The S&P 500 jumped 1.2%; the Nasdaq Composite gained 1.4%; the Dow Jones Industrial Average settled 0.4% higher; and the Russell 2000 rose 1.9%. 

Stocks were already moving higher before buying increased in response to a jump in the ISM Services PMI for October that should bode well for economic and earnings growth. The positive bias was also related to relief that some unknowns about the election will be cleared up before trading begins on Wednesday. 

Buyers were not deterred by the idea that other unknowns around the election may still linger after election night. Some states use extended time to count votes for House races and there is the possibility of recounts.

Still, many stocks participated in upside moves. The equal-weighted S&P 500 jumped 1.2% and 24 of the 30 Dow components closed with gains. All 11 S&P 500 sectors closed higher and seven of them were at least 1.0% higher than yesterday. The consumer discretionary sector (+1.8%) led the pack.

The information technology sector (+1.5%) was among the top performers, benefitting from gains in some mega caps and chipmakers. NVIDIA (NVDA 139.91, +3.86, +2.8%) was a standout from space, passing Apple (AAPL 223.45, +1.44, +0.7%) in terms of market cap.  

Outsized moves are mostly reserved for names with specific catalysts. Palantir Technologies (PLTR 51.13, +9.72, +23.5%), DuPont (DD 85.67, +3.82, +4.7%), GlobalFoundries (GFS 41.37, +5.36, +14.9%) registered big gains in response to earnings.

Treasuries settled in mixed fashion. The 10-yr yield settled two basis points lower at 4.29% and the 2-yr yield settled three basis points higher at 4.21%. This price action followed this morning's economic data and was in response to today's $42 billion 10-yr note sale, which met solid demand.

• Nasdaq Composite: +22.8% YTD
• S&P 500: +21.2% YTD
• Dow Jones Industrial Average: +12.0% YTD
• S&P Midcap 400: +13.5% YTD
• Russell 2000: +11.5% YTD

Reviewing today's economic data:

• The September Trade Balance Report at 8:30 a.m. ET showed a widening in the trade deficit to $84.4 billion (Brieifng.com consensus -$74.0 billion) from a revised $70.8 billion (from -$70.4 billion) in August. That widening was the result of exports being $3.2 billion less than August exports and imports being $10.3 billion more than August imports.
  • The key takeaway from the report is that the imbalance between exports and imports is indicative of a U.S. economy that is running stronger than its global counterparts.
• The S&P Global US Services PMI declined to 55.0 in the final October reading from 55.2.
• The ISM Services PMI increased to 56.0% in October (Briefing.com consensus 53.5%) from 54.9% in September. That is the highest reading since July 2022. The dividing line between expansion and contraction is 50.0%, so the October reading reflects services sector activity accelerating from September.
  • The key takeaway from the report is that the pace of expansion in the largest sector of the U.S. economy accelerated to a two-year high with employment activity returning to expansion after a brief contraction in September. The Backlog Index showed a deepening contraction, which could slow the pace of expansion in the coming months.

Looking ahead to Wednesday, market participants receive the following economic data: weekly MBA Mortgage Applications Index at 7:00 ET, weekly EIA Crude Oil Inventories at 10:30 ET.