Market Recap: Thursday, October 1

The markets closed in the green with NASDAQ remaining the out-performer of the three major indices on the first day of the fourth quarter as investors grew more optimistic that an additional round of stimulus might pass through Congress. The Final Round panel discusses the latest.

Video Transcript

SEANA SMITH: Welcome back to "The Final Round" here on Yahoo Finance. I'm Seana Smith. A choppy first trading day for the month and for the quarter as it stands right now. The Dow on track to close in the green, up just around 45 points, give or take a little bit. S&P up just around a half of a percent, and the NASDAQ, it's been the outperformer all day, still the outperformer into the close up just around 1.5%.

And that does it for the first trading day of October and the first trading day of the fourth quarter. Again, all three of the major averages are closing in the green. The Dow was flip flopping between positive negative territory for the last 60 minutes or so, but closing in the green up just around 35 points, the S&P up a half of a percent, and the NASDAQ, the leader all day, up just over 1%. In terms of the sector action, technology, a big outperformer. That's why we're seeing the NASDAQ up by such a wide margin today, but also consumer discretionary and communication services are also outperforming along with tech.

On the flip side of things, on the other side of things, we have banks and energy lagging. This, of course, is a continuation of what we saw in the third quarter. On the econ side of things, mixed data, keeping sentiment in check by just a little bit and US manufacturing front and US manufacturing activity slowing. Jobless claims better than expected. We did see a week over week drop, but not by much. Jobless claims plateauing over the last month or so, still way above those pre-pandemic levels.

And then on the consumer side of things, higher spending in August, but we also saw personal income falling by a 2.7%, much of that because of the expiration of additional unemployment benefits. So of course, that mixed data there keeping some of the gains today in check. But for more on this, I want to bring in my co-host for the next 27 minutes, Myles Udland. And Myles, when we take a look at the action that we're seeing today, we had stocks searching for direction for much of the trading day when you saw at least how the Dow was behaving. But what stands out to you in today's trading action?

MYLES UDLAND: Well, I think what stands out more is the headlines we're seeing from DC, and it does sound like stimulus is going to happen. Now, of course, it is possible that if we get a very good jobs report tomorrow, everyone says, ah, see, the economy's doing fine, and then we move on as we had been operating for some time under the assumption there will be no additional stimulus until 2021. But when you look at that income and spending data, Seana, that you highlighted earlier where incomes are down, spending moderates somewhat, the savings rate comes down dramatically as consumers draw on the cushion they built up during the summer. We can tell that while things are OK now, that data say very clearly the clock is ticking on the health of the US consumer, which I've written several times over the last I think 10 days that it's quite resilient.

In fact, I think that's the best word right now to describe the state of the consumer, but those dynamics are-- it's obvious to see why that is the case. And if indeed we see Washington come through with additional stimulus, I think that's very positive for the economy and by extension probably positive for markets into the fourth quarter. Otherwise, I think we're still kind of doing what we've been doing for the last few weeks, which is waiting for the election to happen, see what happens, and then we can talk about markets from there, whether we get to record highs again, whether we see the market correct further. I know Jared will talk about the positive nature of the technical setup today, and indeed, it has turned around. But I am, again, I think just surprised by where the fiscal conversation has gone just in the last couple of days.

SEANA SMITH: Andy, you're muted.

ANDY SERWER: Sorry about that. Happens to the best of us and to the worst. So just to pick up on what Myles was saying, yeah, stimulus front center day after day after day after day. But just to give you a sense maybe of some urgency here, I was doing a Zoom call with Eric Garcetti, the mayor of Los Angeles, with a bunch of other mayors and CEOs, and the mayor picked up his phone while he was talking. Like, he just went like this, and I was like, that's not right. I mean, you don't do that, right? And he apologized. This is all real time. He goes, I'm sorry, that was Treasury Secretary Mnuchin.

And so, you know, there's stuff going on. There's conversations, as Woody Allen used to say, right? But unless, of course, he was looking for, you know, some help in his motion picture business, which of course Steven Mnuchin used to be in. But no, I mean, in all seriousness, I mean, there's some urgency here, you know, with Nancy Pelosi and Steve Mnuchin. It remains to be seen whether, yeah, they're going to get across the goal line here. The other point I want to make is just with regard to layoffs, which we've been talking about this week, which has really taken a turn for the worse.

I don't think it's any coincidence that, you know, we're heading into the fourth quarter here. So not only are things getting better necessarily with COVID, and in some instances, Wisconsin, New York, they're getting worse. But, you know, from an accounting standpoint, I just, you know, boy, what do companies like to do in the fourth quarter? Clean house. And so I don't see this jobs picture necessarily getting much better over the coming weeks and months, unfortunately, Seana.

SEANA SMITH: Yeah, it's interesting, Andy, because we have been talking about the fact that we saw that first wave of layoffs a couple of months ago. Myles has brought up a couple of times just in terms of the white collar jobs that could be lost and probably will be lost over the next couple of months. We certainly are seeing some of that at least take place over the last couple of days. But Jared Blikre, I want to bring you in very quickly. Myles mentioned you a couple of minutes ago, just talking about the technical setup and what we're seeing at least from I guess the past 24 hours, what we saw today in trading, at least looks positive, I guess you can put that spin on it when you take a look at the fact that the Dow eked out gains today, S&P above its 50 day moving average, and the NASDAQ by far the leader up almost 1.5%.

JARED BLIKRE: Yeah, I'd say fairly constructive day here, and I hope-- it's Steve Mnuchin. I've got to get back to this guy.

[LAUGHTER]

But we did close above the 50 day moving average today, and this is the S&P 500. Sounded like, I think I've said this way too many times over the last few days, but 1,410 is the resistance point to look at. You look at the NASDAQ, even better, because it has now cleared this resistance from early September. I still believe that S&P 500 level is going to be more determinative of where the market goes next, but we'll also take a look at the Russell, which was up 1.38%-- or 1.3% percent today, and it's right at that, at its very own deciding level right here. So I think in the month of October, we're just going to have a lot of back and forth, probably end up frustrating a lot of traders to the upside and the downside, and that's what everybody's pretty much expecting right now.