Futures little changed after Dow posts best day since July on stimulus optimism

U.S. stock index futures were little changed in overnight trading after the Dow posted its best day in months as investors await updates on the ongoing fiscal stimulus discussions.

The major averages rose sharply on Wednesday after President Donald Trump tweeted support for aid to airlines and other stimulus measures, stoking hopes that a smaller aid package could be passed by lawmakers.

The Dow Jones Industrial Average gained 530.7 points, or 1.9%, for its best day since July 14. The S&P 500 advanced 1.74%, while the tech-heavy Nasdaq Composite climbed 1.88%. Wednesday’s rally was broad based, with all 11 S&P 500 sectors finishing higher. 

With Wednesday’s gains, stocks clawed back Tuesday’s losses and then some. Stocks fell late in the day on Tuesday after Trump said that he told his administration to end coronavirus stimulus talks with Democrats until after the election. 

“Even though there is uncertainty now about the fiscal stimulus negotiations, regardless of who wins the election, we are likely to have additional fiscal stimulus,” said Nancy Davis, founder and portfolio manager at Quadratic Capital. “With the uncertainty, I think it’s important for investors to have a diversified portfolio, with investments that are uncorrelated to each other. We should expect more uncertainty going forward,” she added.

Amid the ongoing back-and-forth over stimulus negotiations, Vice President Mike Pence and Sen. Kamala Harris will take the stage on Wednesday night in Salt Lake City for their first and only debate. The event comes with less than four weeks until Election Day, and just two days after Trump returned to the White House following his coronavirus hospitalization.

Investors are also looking ahead to Thursday’s initial jobless claims number, which will be released at 8:30 a.m. ET. Economists polled by Dow Jones are expecting first-time claims for unemployment insurance to total 825,000 for the week ending Oct. 3. This would mark a slowdown from the 837,000 first time claims for the previous week.

All of the major averages are higher for October, clawing back some of September’s losses, which was the first negative month since March.

Still, a host of risks remain in the market, including rising Covid-19 cases around the world, as well as a slowdown in the rate of the economic recovery. 

“The risks we are now facing—medical, economic, and political—have waxed and waned over the year, so a difficult quarter will be nothing new,” noted Brad McMillan, Chief Investment Officer for Commonwealth Financial Network. “In fact, after the election, there is a good chance next year will look much better. We will have to wait and see, but for the moment, be prepared for volatility — but remember that it will pass,” he added.

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.