Dow jumps more than 300 points Monday ahead of U.S. midterm elections

Katz: Most of the stock market's losses are done

The Dow Jones Industrial Average rose on Monday at the start of a busy week with congressional midterm elections and key inflation data in the coming days.

The Dow traded up 327 points, or 1.01%, while the S&P 500 gained 0.5%. The Nasdaq Composite rose 0.28%, trading between gains and losses during the session.

Apple shares fell about 1% after the tech company said iPhone production has been temporarily reduced due to Covid-19 restrictions in China. Meanwhile, shares of Palantir fell more than 12% after the company posted disappointing quarterly results. Carvana fell 15% after falling more than 20% earlier in the day.

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Facebook parent Meta gained about 5% after a Wall Street Journal report said the company could begin layoffs as soon as Wednesday.

Key election and economic reports ahead

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

Investors could welcome a potential stalemate coming out of a Democratic presidential midterm election with a Republican or divided Congress, which has historically meant above-average gains, RBC’s Lori Kalvasin said in a note on Monday.

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“The market is hoping that some kind of Republican Congress will lead to some kind of gridlock in Washington, which they see as good, or at least no new spending, which would be good for rates and the Treasury supply,” Brad said. Deputy CIO of Conger, 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. The tepid message could signal to investors that a prolonged period of higher interest rates may not be imminent.

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“[In] In order for the stock and bond markets to match the inflation rates shown in the table after the peak, inflation would have to continue to fall — and more sharply than we’ve seen yet. Until the Fed signals that the ‘corner’ is close, things may remain difficult,” Baird’s Ross Mayfield wrote in a recent note.

Elsewhere, several companies are expected to report on Monday, including Activision Blizzard, Lyft and Take-Two Interactive. Corporate earnings season is winding down, and most S&P 500 companies have reported results.

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