The market’s rising today to finish off September on a high note. It’s been a rough month for bulls, but if stocks can continue their comeback heading into October, investors may be treated to a series of new all-time highs in the process.
As it stands, that’s not an overly steep hill to climb. Nor is it an unrealistic goal for the next few weeks.
The S&P, for example, is now down only 3.85% on the month and roughly 6.80% from its record high.
A stimulus deal could be enough to launch the index past those price levels with ease. And, as luck would have it, Treasury Secretary Steven Mnuchin just revealed that Congress might reach an agreement sometime soon.
“I say we’re going to give it one more serious try to get this done and I think we’re hopeful that we can get something done,” Mnuchin said this morning at the Delivering Alpha conference.
“I think there is a reasonable compromise here.”
He continued, adding:
“Let’s see if we can get a compromise agreement with the speaker, something that works, and then we’ll continue to work with both sides on all the exact language and the policies.”
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The speaker – House Speaker Nancy Pelosi – also said she was “hopeful” in an interview with MSNBC.
“We’ll just see what they come back with today and how our negotiations go next,” Pelosi remarked.
President Trump will likely want a deal prior to the presidential election as well. Republican Senators could get nudged by POTUS if he feels House Democrats have made enough concessions in their stimulus proposal.
There’s always the possibility, however, that lawmakers remain staunchly opposed to each other’s plans.
Outside of stimulus talks, Wall Street also enjoyed a sentiment boost from a potential coronavirus treatment solution. Regeneron Pharmaceuticals (NASDAQ: REGN) reported last night that its REGN-COV2 drug improved symptoms in non-hospitalized coronavirus patients.
And while those types of patients aren’t typically the ones facing the most severe Covid-related complications, it could be a boon for many people who end up contracting the virus.
“The greatest treatment benefit was in patients who had not mounted their own effective immune response, suggesting that REGN-COV2 could provide a therapeutic substitute for the naturally-occurring immune response,” explained Regeneron Chief Scientific Officer George D. Yancopoulos.
Coronavirus treatments are predicted to become an important part of squashing the virus moving forward. With infections making a resurgence in the West, the focus may shift to mitigating – not stopping – Covid-19.
“Coronavirus infection rates are rising in Europe and the United States as children return to school,” wrote Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, in a note.
“We expect the United States to continue its modest pace of economic improvement, though virus growth and a softer labor market are threats.”
In other words, little has changed in terms of the big picture. Covid-19 and stalled payroll gains still represent the biggest downside risks. Meanwhile, a stimulus deal could send equities soaring.
That’s reason enough for bulls to stay long on stocks. All three major indexes may continue to improve as a result.
And don’t forget: the market’s grown fat on coronavirus-driven stimulus. Even a contested election wouldn’t be able to stop another surge if Republicans and Democrats can finally come to terms.