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Traders kicked off the new month on an optimistic tone as good news started to outweigh the bad. This included a hefty dose of positive earnings data. Original estimates had the broader market seeing EPS sink by nearly 40% for the quarter. However, that hasn’t been true for most of the market. And this week, several bellwethers continued the trend of better-than-expected reports. More importantly, guidance figures have started to ramp up, indicating the pandemic’s effects may be abating.
And the effects could be abating on the citizen level as well. This week, traders again received some hope that the latest round of stimulus measures from the U.S. government could be passed sooner rather than later. This was a reversal of last week when Congress continued to battle over key provisions in the stimulus bill. A hefty dose of Fed action also helped boost the mood on the street.
However, it wasn’t all good news as the number of coronavirus infections has continued to rise and overall data remains poor. Traders balanced the good news with the continued threat of the virus, slowing economic conditions and the potential for cities to see more closures this fall. Add in the continued worries about the U.S. election as well as new geopolitical threats and one could see why gains were kept in check.
In the end, the optimism of the earnings news kept stocks moving higher to start off the month.
Be sure to check out our previous Wrap here when we witnessed the end of another volatile month.