US stocks open higher as investors cling to stimulus hope

Wall Street’s main indexes opened higher on Monday as investors remain optimistic about a fiscal stimulus deal in Washington, and as enthusiasm for Apple builds ahead of the tech giant’s iPhone launch event on Tuesday.

In early morning trading in New York, the Dow Jones Industrial Average was up more than 172 points or 0.6 percent at 28,759.26.

The S&P 500 – a gauge for the health of United States retirement and college savings reports – was up 0.87 percent while the tech-heavy Nasdaq Composite Index was up 1.35 percent.

Shares of Apple were leading the charge higher, with shares of the iPhone maker trading up  2.92 percent ahead of a scheduled launch event on Tuesday.

Investors are still hopeful that the US Congress could pass a new round of coronavirus relief aid.

The COVID-19 pandemic continues to weigh on the nation’s economic recovery as cases surge and local and state officials weigh the possibility of bringing back restrictions and lockdowns.

The administration of US President Donald Trump on Sunday urged Congress to pass a stripped-down coronavirus relief bill using leftover funds from the now-expired Paycheck Protection Program to help businesses weather the downturn and keep workers employed.

A Goldman Sachs note on Monday said that surveys suggest that small business balance sheets have continued to recover in recent months.

“However, in the most troubled industries, small businesses see risks in the months ahead. If conditions do deteriorate, many of these businesses might struggle to easily access credit because bank lending standards have tightened and the Main Street Lending Program appears unlikely to provide a workable solution,” Goldman analysts wrote.

Earnings seasons kicks off this week with banks, healthcare companies and airlines on deck to report.

Analysts predict third-quarter earnings for S&P 500 firms to have fallen 21 percent from a year earlier, smaller than a 30.6 percent slump in the second quarter.

Second wave: A rebound in the coronavirus worldwide

The recovery seen in June and July has flattened out while new cases of the coronavirus continue to surge around the world.

Cases in the United Kingdom, Italy and France have skyrocketed in recent weeks. Those governments are announcing new restrictions and again shutting down bars, restaurants and other businesses.

The International Monetary Fund and World Bank are beginning their annual meetings this week – in the worse economic recession since the Great Depression. The two international financial organisations warn that as many as 115 million people will fall into extreme poverty this year.

“For the developing world, the recession has been worse than expected,” World Bank President David Malpass told Bloomberg television news. “For the poorest in the world, COVID-19 is a problem but the biggest problem is poverty and food shortages,” he said.