Wall Street gains, gold jumps on stimulus likelihood

GLOBAL MARKET - NEW YORK. U.S. stocks joined their global counterparts in the black on Friday as ongoing fiscal aid talks and growing expectations for Democratic election victories boosted optimism over economic stimulus.

Gold jumped and the dollar dipped as investors bet on the increased probability of forthcoming coronavirus relief.

Wrangling in Washington over pandemic aid has dominated markets this week, which began with President Donald Trump halting negotiations on a comprehensive aid package, followed by efforts to pass incremental stimulus measures.

"Aside from the market just liking more free money it feeds the belief that stimulus will re-energize U.S. and world economies," said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York. "The question then becomes if the market's pricing in the stimulus, what kind of letdown will occur if it fails to materialize?"

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Trump was preparing to return to the campaign trail a week after he announced that he had contracted COVID-19.

Reuters/Ipsos polls show Trump's approval rating plummeting, with Americans steadily losing confidence in his handling of the pandemic, while Democratic challenger Joe Biden makes gains in several key swing states.

"With a Democratic president in the White House working with a Democratic speaker, the potential for stimulus is much greater," Pavlik added.

Next week, investors' attention will shift from fiscal relief and the impending election as third-quarter reporting season begins in earnest.

Analysts now see third-quarter S&P 500 earnings, in aggregate, falling by 21% year-on-year, according to Refinitiv.

The Dow Jones Industrial Average rose 117.86 points, or 0.41%, to 28,543.37, the S&P 500 gained 20.12 points, or 0.58%, to 3,466.95 and the Nasdaq Composite added 111.51 points, or 0.98%, to 11,532.49.

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European stocks advanced on upbeat retail earnings forecasts as investors kept close watch on coronavirus relief progress in the United States.

The pan-European STOXX 600 index rose 0.49% and MSCI's gauge of stocks across the globe gained 0.64%.

Emerging market stocks rose 0.71%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.53% higher, while Japan's Nikkei lost 0.12%.

Yields on longer-dated Treasury bonds dipped slightly as traders took profits on positions, driving prices higher on the safe-haven assets.

Benchmark 10-year notes last rose 1/32 in price to yield 0.7654%, from 0.767% late on Thursday.

The 30-year bond last rose 1/32 in price to yield 1.5656%, from 1.566% late on Thursday.

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Oil prices fell but remained on track for their biggest weekly gains since early June due to supply pressures stemming from hurricane-related shutdowns and an ongoing strike of offshore workers in Norway.

U.S. crude fell 0.51% to $40.98 per barrel and Brent was last at $43.23, down 0.25% on the day.

The dollar dipped to a three-week low against a basket of world currencies on fiscal relief optimism and the growing likelihood of a Biden victory.

The dollar index fell 0.53%, with the euro up 0.46% to $1.1812.

The Japanese yen strengthened 0.35% versus the greenback at 105.67 per dollar, while Sterling was last trading at $1.2994, up 0.47% on the day.

Gold prices jumped as the increased likelihood of stimulus pushed investors to bullion as a hedge against possible inflation.

Spot gold added 1.7% to $1,925.01 an ounce.

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