Going Home

By Alex Eule |  Monday, October 5

Discharged. Investors never seemed particularly worried about President Donald Trump's health, and yet his planned release from the hospital still became a reason to buy up stocks today. 

After falling just 134 points Friday in the wake of the president's positive Covid-19 test, the Dow Jones Industrial Average soared 466 points today. To put it another way: The Dow is now up 332 points since Trump's Covid diagnosis. 

To be sure, stocks aren't just trading on the president's health. There's still the question of a stimulus bill -- investors seem to think Congress will come around on a fifth economic rescue package. And there's the question of election certainty. Polls have showed a more one-sided race in recent days, in favor of Joe Biden. There's a month to go, but a wider lead could reduce the chances of a drawn-out election dispute. 

And then there's the fact that markets do strange things that sometimes we can't explain. We keep trying anyway. 

Chris Senyek, chief investment strategist for Wolfe Research, thinks recent events have increased the likelihood of a stimulus deal: 

We continue to believe that President Trump’s positive test increases the chance that a large fiscal stimulus deal ($1.5 trillion+) will pass in the days ahead. The president needs another large package now more than ever. Speaker Pelosi is seeing the size of the deal move closer toward her $2.2 trillion number and now has less of a reason to try to delay the process.

A large relief package could have wide-ranging implications that show up in all sorts of economic metrics, from jobless claims to consumer confidence to holiday spending. 

It won't do much to change the current trends around Covid spread, though. New York City said it was closing schools in certain parts of the city where positivity rates have stayed elevated for the last week. That's not a great sign for re-opening trends. And neither is the news that Cineworld is again suspending its movie theater operations in the U.S. and the U.K. The company owns Regal Entertainment, which operates more than 500 theaters in the U.S. Publicly traded movie theater stocks AMC Entertainment and Cinemark fell 11% and 17%, respectively, on the day. 

The movie-theater chains were actually among a small group of stocks that fell on the day. More than 450 stocks in the S&P 500 were up on the day, in fact, versus just 45 decliners, and two stocks that were unchanged.