Stocks rise ahead of US midterm elections, Dow closes more than 400 points higher

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Stocks rallied on Monday as investors anticipated a busy week with midterm congressional elections and key inflation data on deck over the next few days, and shrugged off a bid warning. Apple.

The Dow Jones Industrial Average traded up 423.78 points, or 1.31%, at 32,827.00. The S&P 500 gained 0.96% to 3,806.80. The Nasdaq Composite rose 0.85% to 10,564.52, after trading between gains and losses earlier in the session. All three major averages recorded a second consecutive positive day.

Apple shares gained around 0.4%, despite falling more than 1% earlier in the session, after the tech company said iPhone production had been temporarily curtailed due to restrictions of Covid-19 in China. Shares of Palantir, meanwhile, fell nearly 11.5% after the company reported disappointing quarterly results. Carvana fell around 15.6%.

Facebook parent Meta gained 6.5% following a Wall Street Journal report that the company could start layoffs as early as Wednesday.

Upcoming key elections and economic reports

Tuesday’s midterm elections will determine which party controls Congress and affect the direction of future spending. Democrats currently control the House and have a majority in the Senate.

Investors might approve of a potential stalemate that could arise from the midterm elections because a Democratic president, with a Republican or divided Congress, has always meant above-average gains, according to RBC’s Lori Calvasina in a Monday note.

“The market is hoping that some kind of Republican sweep of Congress will either lead to some kind of gridlock in Washington, which they read as good, or at least no new spending, which would be good for rates and supply. Treasury,” Brad said. Conger, Deputy CIO at Hirtle Callaghan & Co.

On the economic front, investors expect Thursday’s consumer price index report to provide further insight into how far the Federal Reserve needs to go to reduce inflation. A hot report could signal to investors that a pivot after an extended period of higher interest rates may not be imminent.

“[In] For stock and bond markets to match the post-peak inflation performance shown in the chart, inflation must continue to fall – and at a faster rate than we have yet seen. Until the Fed signals that the ‘pivot’ is near, things could remain difficult,” Baird’s Ross Mayfield wrote in a recent note.

Elsewhere, several companies are expected to report on Monday, including ActivisionBlizzard, Lyft and Interactive Take-Two. The corporate earnings season is winding down, with the majority of S&P 500 companies reporting results.

Read the coverage of the mercado de hoy en español here.

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