Dow Spikes Midday as Quinnipiac Polls Show Biden Holding Strong Lead
- The Dow Jones rallied 340 points Thursday.
- Strong U.S. GDP helped boost investor sentiment.
- Dow bulls went haywire midday after a strong round of polling for candidate Joe Biden.
Positive risk sentiment returned on Thursday, as investors bought the dip in the Dow Jones after initial jobless claims and Q3 GDP beat forecasts. Dow bulls must now look ahead to the election, where today’s polling from Quinnipiac University showed a strong lead for Joe Biden.
Dow Rises on Strong U.S. Data, Weak Trump Polling
The Dow Jones was the weakest of the three major U.S. stock market indices, as the Nasdaq rallied over 2%and S&P 500 was up 1.9%.
U.S. data were generally positive, as Q3 GDP came in better than forecast at 33.1%. This had little effect on the stock market, as a strong quarter has been widely expected. Most of the bump was caused by dramatically improved consumer spending, as government money caused more than 50% of the unemployed to enjoy higher wages than when employed.
Watch the video below for analyst reaction to the record U.S. GDP bounce:
Hopes of more artificial intervention in the economy has been the carrot dragging Dow bulls along for some time. Still, with stimulus talks essentially on hold till after the election, that support is gone. The impact of coronavirus on global activity is starting to weigh on stocks more forcefully now that the U.S. is not loading its fiscal bazooka anytime soon.
Initial jobless claims were better than forecast, but the continuing numbers indicate the jobs recovery’s sluggish nature.
Economist James Knightley at ING is already looking ahead to Q4, where he is much less optimistic about growth potential. Knightley cautions against the possibility of a negative reading in Q4 should the economy go back into lockdown:
We continue to hear encouraging words on the prospect of an approved Covid-19 vaccine in coming months, but the timeframe to roll out a vaccination program means a return to pre-Covid consumer behavior norms is a long way off. Given the potential health and economic impact of a European style spike in Covid and the prospect of weaker income growth, the risks are increasingly skewed to a sub 2% GDP growth reading for 4Q 2020. If aggressive containment measures are introduced in December it will likely be negative.
Despite some obvious election jitters in the marketplace, investors still appear optimistic that a blue wave is possible on November 3. Biden continues to poll well, but it would not take much of a narrowing in the margin to push Trump back to flat in several critical swing states. Quinnipiac polling came in today, demonstrating a clear lead for the former Vice President.
Watch the video below for the latest updates on the 2020 presidential race.
Dow 30 Stocks: Apple Leads Ahead Of Earnings
On a choppy day in the Dow 30, Apple stock powered the index with a more than 4% gain ahead of earnings. Fellow tech giant Microsoft rose 1.5% as it rebounded from Wednesday’s rough performance.
Watch the video below for forecasts on the tech earnings deluge.
The Dow Jones’ heaviest weighted stock, UnitedHealth, traded flat, while Disney and Caterpillar rallied over 2%.