The broader indices' pace slowed after yesterday's energetic rally, as Tuesday offered up little for the market to hang its hat on.
House Speaker Nancy Pelosi told Fox News she doesn't believe a deal on more economic stimulus will be reached this week. That dulled the optimism sparked by earlier comments from Treasury Secretary Steven Mnuchin and Senate Minority Leader Chuck Schumer pointing toward modest progress.
"Europe has agreed on a historic recovery fund, but U.S. stimulus is now at risk of fading. Wrangling over the size and makeup of a new U.S. fiscal package is intensifying as key benefits expire and states face huge budget shortfalls," BlackRock Investment Institute strategists write. "Congress still looks far from reaching a comprehensive deal but we could see a $1-1.5 trillion fiscal package that extends some federal stimulus measures through late-2020."
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But the earnings calendar kept things interesting.
Video game maker Take-Two Interactive (TTWO, +5.9%) jumped after reporting that stay-at-home trends helped the company more than double its sales for its most recent quarter.
Energy giant BP (BP, +7.5%), meanwhile, cut its dividend in half – a move we recently warned investors about. But Wall Street celebrated the cash savings, as well as BP's new clean-energy strategy.
The Dow Jones Industrial Average posted a modest 0.6% gain to 26,828, the S&P 500 gained 0.4% to 3,306 and the Nasdaq Composite rose 0.4% to a record 10,941. The small-cap Russell 2000 led the major indices with a 0.7% improvement to 1,517.
Get Ready for Election Volatility
One thing's for certain: Investors are beginning to confront the uncertainty that accompanies the 2020 elections, now just 91 days away.
"While predictable elections were nonevents, close elections historically have seen equities begin to go sideways starting in July; then rally strongly after a clear win, independent of who won," writes Deutsche Bank chief global strategist Binky Chadha in a recent note. "With a pandemic-induced, likely unprecedented volume of mail-in ballots, we see considerable risks to getting a quick and clear election resolution this time around, with the prospect that volatility endures post-election day."
That said, investors with a little risk tolerance who are looking to generate extra returns based on the election's outcome can begin laying the groundwork.
Market analysts expect several areas of the market to swing based on the Nov. 3 result, and we've explored both outcomes – 10 stocks that look attractive under another four years of the Donald Trump administration, and 10 stocks that would benefit from Joe Biden moving into the White House.
If the latter occurs, Biden would have a lot to live up to, from a Wall Street perspective; Trump and his predecessor, Barack Obama, rank among the best presidents as far as stock returns are concerned.
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