Dow rallies more than 450 points on hopes for a stimulus package

Mandatory Credit: Photo by JUSTIN LANE/EPA-EFE/Shutterstock (10784601a) A view of the New York Stock Exchange in New York, New York, USA, 21 September 2020. The Dow Jones industrial average was down over 800 points during trading as investors are reportedly reacting to worries about the continuing coronavirus pandemic and uncertainty about fiscal stimulus plans. New York Stock Exchange, USA - 21 Sep 2020

(CNN) — The US stock market rallied on Monday, ignoring negative headlines that weighed on the market over the past few weeks in favor of hoping for a stimulus deal out of Washington.

Stocks shot higher at the opening bell in New York and continued to rally as the session went on. The Dow was up more than 450 points, or 1.7%, at midday, while the broader S&P 500 climbed 1.5%. These gains come after four consecutive weeks of losses.

The Nasdaq Composite traded 1.2% higher around noon.

Investors are hoping that Congress will agree on a new stimulus deal, despite fruitless negotiations in recent months.

On Sunday, House Speaker Nancy Pelosi told CNN that House Democrats may offer their latest stimulus proposal as legislation if revived talks with the Trump administration do not yield a deal her party can get behind.

Yet even as investors are feeling good about a possible deal, economists are a bit more pessimistic. Morgan Stanley became the latest bank to downgrade its growth outlook because of the slimming chance of another stimulus bill this year.

The approaching end of the month might be another reason stocks are higher. After a bad month in the market, investors almost always have a need to buy some stocks at the end of it unless they decide they want to be less invested than before, said Sebastien Galy, senior macro strategist at Nordea. After Monday, there are only two trading days left in September.

But this doesn’t mean the worries that pushed stocks lower in the past weeks are gone.

In fact, not that much has changed from last week, and volatility remains high. The CBOE Volatility Index, or VIX, is slightly higher on Monday and remains in elevated territory even though it has come down from the panic-fueled levels it has hit earlier this year.

The impending election, uncertainty about the future path of Covid-19, worries about rising infections in the winter and a slowdown of the economic recovery have been weighing on the market for weeks.

The week ahead will also be particularly busy with economic data and political events.

President Donald Trump and Democratic presidential candidate Joe Biden are facing off in the first of three debates on Tuesday, and the September jobs report — the last look at the employment situation before the election — comes out on Friday. Economists predict 850,000 jobs were added to the US economy in September, a sharp slowdown from the 1.4 million added in August. The unemployment rate is expected at 8.2%, marginally lower than in the prior month.