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  • The Dow Jones Industrial Average rose by as much as 345 points on Monday.
  • Upbeat China data outweighed new virus lockdowns and uncertainty surrounding the U.S. presidential election.
  • More volatility will arise from the U.S. presidential election.

The Dow and broader U.S. stock market rallied on Monday, despite an uncertain U.S. election Tuesday and news of new virus lockdowns. Markets were fueled by solid industrial activity in Europe and Asia.

Dow, S&P 500, Nasdaq Rally

All of Wall Street’s major indexes traded higher Monday, rebounding from their worst week since March. The Dow Jones Industrial Average rose by as much as 345 points.

The Dow Jones Industrial Average rose on Monday. | Chart: Yahoo Finance

The broad S&P 500 Index of large-cap stocks gained 1.10%, while the technology-focused Nasdaq Composite Index advanced 0.88%.

A measure of implied volatility known as the CBOE VIX traded relatively flat on Monday after surging to four-month highs last week. The so-called “fear index” is currently hovering in the mid-37 region on a scale of 1-100, where 20 represents the historic average.

Upbeat China Data Outweighs Concerns About Virus Cases And U.S. Election

Upbeat factory data in China fueled markets on Monday.

The Caixin/Markit Manufacturing Purchasing Managers Index (PMI) for Chinese manufacturing pointed to faster growth. The PMI rose to 53.6 in October, higher than the 53.0 reading forecast by analysts in a Reuters poll. October’s PMI reading was the highest since January 2011. Watch the video below for more analysis:

Election volatility hangs over the markets. Ahead of Tuesday’s election, Joe Biden is leading President Donald Trump in polls. According to a Wall Street Journal/NBC News poll on Sunday, the former vice president garnered 52% of the support of registered voters compared to 42% for the president.

The Senate election could have a big impact on markets, as many key policy changes, including new fiscal stimulus, depend on who has majority control. Analysts are concerned that an uncertain outcome could delay a much needed fiscal stimulus for the U.S. economy.

Rising virus cases are also still a big concern.

England adopted a stay-at-home order and closed all non-essential businesses for the next four weeks following a surge in virus cases.

According to The Wall Street Journal, the United States reported 81,400 new cases on Sunday, a slight increase from the previous day but down from the record high at the end of last week.

Simon Ballard, chief economist at First Abu Dhabi Bank Pjsc, said:

Whichever way you look at it, this coming week will be huge for U.S. and global markets. We see the potential for a sharp rise in volatility around these events — and all in the context of a still deteriorating Covid-19 situation across much of the U.S., Europe and elsewhere.

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