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Best Single Trading Day in Months for Dow, Nasdaq, S&P

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Market indexes posted their best single day of trading in months, up a percentage point and a half or more on strong economic data and Q3 earnings reports. The Dow managed its strongest regular session since July, +534 points or +1.56%. The S&P 500 put up its strongest trading day since early March, +1.71%, and now within 2% of its all-time highs reached earlier this year. The Nasdaq outdid even that, posting +1.73% gains, +251 points, for its best single session since May 20th.

The indexes had been trying to turn around a steep drop to the start of the week, following flight cancellations announced at Southwest (LUV - Free Report) , helping send airlines lower only a couple days from Delta’s (DAL - Free Report) Q3 earnings report. But when Delta’s results came out and doubled earnings expectations, this helped set in motion some positive outlooks for not only airlines and travel, but other industries as well.

Solutions are now being provided by the U.S. Dept. of Transportation to alleviate supply chain bottlenecks ahead of the upcoming holiday shopping season, with the help of private enterprises and unions to provide round the clock dockworking and moving of goods. Now that Covid rates have begun to ebb once again and overseas suppliers come back online, it’s created a backlog of deliveries. It won’t be cheap bringing everything to market in time for the holidays, but availability ought to alleviate worse price spikes going forward.

Speaking of Covid rates, the U.S. is now seeing a 7-day average of new cases below 90K per day. While still much higher than optimum, it represents the lowest rate we’ve seen since the beginning of August, before the Delta variant began to sweep through the country — even infecting (though rarely hospitalizing) people who’d gotten their two-shot vaccinations. And now Moderna (MRNA - Free Report) has gotten a unanimous recommendation for its Covid vaccine booster, following that of Pfizer (PFE - Free Report) /BioNTech (BNTX - Free Report) .

Further, the labor market provided encouraging jobless claims data this morning, posting fresh post-Covid lows both for initial and continuing claims. In fact, it was the first time we saw under 3 million longer-term claims made for the first time since before the pandemic take hold. And on the inflation front, September’s Producer Price Index (PPI), while still +0.5%, did not build on the previous month’s spike, which had been 20 basis points higher.

And we now expect that at the next Federal Open Market Committee (FOMC) meeting — held 2 1/2 weeks from now, on November 2nd and 3rd — will enact a tapering of asset purchases, currently being made at a rate of $120 billion between Treasury and mortgage-backed securities. While it will begin to stem the flow of liquidity in the market, inflation running hotter than the optimum 2% and employment ratcheting down toward pre-pandemic levels makes this a decision poised to firm up economic conditions.

For tomorrow, in addition to earnings reports from Goldman Sachs (GS - Free Report) , Prologis (PLD - Free Report) and J.B. Hunt Transport (JBHT - Free Report) , we’ll get plenty more economic data as well, including Retail Sales, Imports and Exports, the Empire State Index and Consumer Sentiment. What’s more, we’re just getting started. Perhaps good news can beget further good news?

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