October 5, 2020

Coming off a solid start to October, the U.S. equity market last Friday declined on the news of the President contracting COVID and concerns of how it may the November 3 presidential elections.  The Dow and S&P 500 failed to turn positive with a late-day rally, dropping 134.09 and 32.36 points, or -0.48% and -0.98%, respectively.  Large cap technology again plagued the NASDAQ, dropping 251.48 points, or –2.22%.

In addition to investors watching the President’s progress in fighting COVID, attention in on the battle in Washington over the pending approval of an economic stimulus package.  Calls for such a package began from Federal Reserve Chair Jerome Powell, saying in a recent speak that additional stimulus was needed to help the U.S. economy recover from the coronavirus lockdowns.

Optimism of the President’s recovery and the prospect of a stimulus package eventually being approved has Dow futures indicating as much as a 200 point gain at market’s open, with S&P futures up more than 20 points and NASDAQ up about 80 points shortly before 6:30am PDT today.

The market is also paying attention to the VIX index, a measure of potential volatility using prices of futures contracts, is tracking at its highest levels in a week.  At the open of trading this morning, the VIX has increased to more than 28 – an indication of anticipated volatility in the markets ahead.