After yesterday’s bath, it was another broad rally today as the first day of Q4 started off with a bang. Bolstering optimism was the new Merck drug for COVID and Biden signing the stop-gap bill.  There was also increased consumer spending and factory activity, both of which point to more recovery and also more inflation, all reflected in value stocks once again outperforming growth. And there was the latest Fed pronouncement with the Philly prez saying the tapering should begin soon but no rate hikes until at least late 2022.  Volume was a little above average at just over 11 billion. 

Fri   October 1, 2021  4:06 PM

Wall Street kicks off October with gains, boosted by economic optimism

By Stephen Culp

DJ: 33,843.92  -546.80       NAS: 14,448.58  -63.86         S&P: 4,307.54  -51.92      9/30

DJ: 34,326.46  +482.54      NAS: 14,566.70  +118.12       S&P: 4,357.04+49.50       10/1

Oct 1 (Reuters) - Wall Street advanced in a broad rally on Friday, after sorting out conflicting news about the economy, the battle against COVID, and legislative wrangling in Washington at the start of the fourth quarter.  All three major U.S. stock indexes began trending higher by late afternoon, buoyed by economically sensitive cyclicals.

"It's the first day of trading in a new quarter so it's common to see stocks move in and out of the plus and minus columns," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "September played its traditional role by cooling down the market and probably presenting a buying opportunity."

Merck & Co Inc (MRK.N) revealed that a recent study showed its experimental oral drug for COVID-19 cut risk of death and hospitalization by about 50%, sending its shares jumping about 10% and boosting economic reopening sentiment. read more  The news provided "another reason to be optimistic," said Cardillo. "It lessens the threat of the virus and obviously that means more people going back to work, more spending."   While U.S. President Joe Biden signed into law a stop-gap bill to continue the government through Dec. 3, lawmakers only succeeded in kicking the can down the road. read more  This lack of resolution helped prompt rating agency Fitch to issue a warning that the United States' 'AAA' credit rating could be at risk.

A host of economic data released on Friday showed increased consumer spending and accelerated factory activity and elevated inflation growth, a formula that could help nudge the U.S. Federal Reserve toward shortening its timeline for tightening its accommodative monetary policy. read more  Philadelphia Fed President Patrick Harker repeated his view expressed in a speech delivered on Wednesday that he believes the central bank should begin tapering its asset purchases "soon," but reiterated that he does not expect it to hike key interest rates until late next year or early 2023. 

The Dow Jones Industrial Average rose 482.54 points, or 1.43%, to 34,326.46; the S&P 500 gained 49.5 points, or 1.15%, at 4,357.04; and the Nasdaq Composite added 118.12 points, or 0.82%, at 14,566.70.  Of the 11 major sectors in the S&P 500, all but healthcare stocks ended higher.  The sector's gains were capped by a 11.8% drop in shares of COVID vaccine maker Moderna Inc (MRNA.O) in the wake of the Merck news. read more  Economic optimism prompted value stocks (.IVX) outperform growth (.IGX), and transports (.DJT) and smallcaps (.RUT) to outperform the broader market.

Advancing issues outnumbered decliners on the NYSE by a 2.17-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favored advancers.  The S&P 500 posted 10 new 52-week highs and nine new lows; the Nasdaq Composite recorded 63 new highs and 136 new lows.

Volume on U.S. exchanges was 11.02 billion shares, compared with the 10.70 billion average over the last 20 trading days.