Dow futures up more than 400 points as investors count down to election

Stocks ended lower Friday, capping a losing week and month for major indexes. The Dow
DJIA,

fell 4.6% last week, leaving the blue-chip gauge with a monthly loss of 6.5% — its largest since March. The S&P 500
SPX,

saw a 5.6% weekly loss, leaving it down 2.8% for the month; the Nasdaq Composite
COMP,

suffered a 5.5% weekly fall, leaving it down 2.3% in October.

Weekly declines for the Dow, S&P 500 and Nasdaq were the largest since March.

What’s driving the market?

U.S. elections loom on Tuesday. An unclear outcome remains the biggest risk, analysts said.

A final Wall Street Journal/NBC News poll published Sunday showed Democratic challenger Joe Biden holding a 10 percentage point lead — 52% to 42% — over President Donald Trump. Biden’s lead was essentially unchanged from an 11-point lead seen in mid-October, but the survey did portray a tightening race when it came to battle ground states that could determine the outcome in the electoral college.

“As both candidates will opt for big increases in fiscal spending over the coming months, investors don’t seem too bothered about who will win. The markets will prefer a clear outcome — although this may not be the case,” said Fawad Razaqzada, market analyst at ThinkMarkets, in a note.

The biggest risk is a contested outcome, he said, which “could trigger a big selloff for stocks and other risk assets, and send safe haven dollar and yen higher,” he said.

Meanwhile, analysts said upbeat economic data appeared to be a positive factor in early Monday action.

The Caixin manufacturing purchasing managers index, a gauge of activity in China’s manufacturing sector, rose in October — a positive sign for domestic demand that provided a lift to Asian markets early Monday. It was a similar story in Europe after upbeat PMI readings.

Last week’s damage was tied in large part to a surge in COVID-19 cases that triggered new restrictions on activity in European countries and stoked worries about the fate of the U.S. economic recovery.

The U.S. reported 81,400 new cases on Sunday, a slight increase from the previous day but down from the record seen late last week, The Wall Street Journal reported, citing data from Johns Hopkins University. The seven-day average of new cases continues to exceed the 14-day average in most states, the newspaper reported, indicating a continued acceleration in the spread of the virus.

Investors face another torrent of corporate results in the week ahead, with 128 S&P 500 companies due to issue results. Earnings for the S&P are set to decline for a third straight quarter as they deal with the pandemic, but the drop appears set to be less drastic than initially feared. After last week’s barrage of earnings, including strong results from big Tech heavyweights, FactSet said its model now looks for a 9.8% blended profit decline for the S&P 500 versus its initial call for a 20.5% drop before the start of earnings season.

The economic calendar on Monday features the final reading of the Markit manufacturing purchasing managers index at 9:45 a.m. Eastern, followed by the Institute for Supply Management’s more closely watched manufacturing activity index at 10 a.m.

September construction spending figures are also due at 10 a.m.

Which companies are in focus?

• These stocks were in focus in premarket activity:
• Clorox Co. CLX shares rose more than 3% after the provider of home cleaning and care and health and wellness products reported a profit that significantly exceeded expectations, boosted by strong sales growth due to the COVID-19 pandemic and as people spend more time at home.
• Shares of Estee Lauder Cos. EL were up 0.4% after the company reported a fiscal first-quarter profit and sales that beat expectations, with a strong performance in skin care sales offsetting weakness in makeup, but provided a downbeat outlook for the current quarter.
• Lumber Liquidators Holdings Inc. LL shares were up more than 8% after the wood-flooring seller reported third-quarter profit and sales that rose well above expectations.
• Wingstop Inc.
  WING,
  
  shares rose more than 2% after the chicken chain said in preliminary third-quarter earnings that systemwide sales rose 32.8% to $509.2 million.