Stocks rose on Tuesday morning amid hopes for a resolution of the fiscal stimulus stalemate, as House Speaker Nancy Pelosi set Tuesday as the deadline for any pre-election deal with Senate Republicans. Meanwhile, the Justice Department filed a major antitrust lawsuit against Google, and the Commerce Department reported new housing market data. Housing starts for single-family homes rose a strong 8.5% in September, to an annualized 1.108 million units, while starts for multi-family housing fell 16.3% to an annualized 307,000 units. The Dow rose 0.4%, the S&P 0.4%, and the Nasdaq 0.1%. Crude oil traded near $40.50 per barrel, while gold rose $2 to $1913 per ounce.

Treasury bond yields have been stable at low levels in recent months, this as the Federal Reserve has worked to keep the U.S. markets operational. Corporate bond yields, meanwhile, have declined, as investors are now more optimistic on potential default rates. Therefore, spreads between corporate and Treasury bond yields have narrowed in the past few months, though they remain wider than historical averages. The spread between AAA-rated corporate bonds and 10-year government bonds in September was 163 basis points, above the 35-year average of 124 bps but down 50 bps from March. The gap between the government 10-year bond yield and a BAA-rated bond (still investment grade) in September was 268 basis points, above the historical average spread of 233 bps but down more than 70 basis points from March. We watch these spreads closely to gauge the bond market's view of corporate financial strength, which appears to be improving given the narrowing spreads. From an investment standpoint, we think that corporate bonds are relatively attractively valued versus Treasuries. On duration, we recommend the intermediate-term.

Stocks rose on Friday morning following better-than-expected September retail sales data. The Commerce Department said that U.S. retail sales rose 1.9% last month, up from 0.6% growth in August and above the Reuters consensus forecast of 0.7%. The University of Michigan also reported that its preliminary consumer sentiment index for October rose to 81.2, up from 80.4 in September and above the consensus forecast. In vaccine news, Pfizer said that it would not apply for emergency use of its coronavirus vaccine until the third week of November, after it had collected the necessary safety and manufacturing data. The Dow rose 0.9%, the S&P 0.5%, and the Nasdaq 0.2%. Crude oil fell slightly to about $41 per barrel, while gold traded near $1906 per ounce.

There are many ways to check the breadth, or underlying strength, of major stock indices. The easiest is to look at the advance-decline line of an index in relation to price. Another way is to look at the McClellan Oscillator and the McClellan Summation Index of each index. A third path is to look at the Buying Percent Index (BPI) of each index and see what percent of issues are on point & figure buy signals.

Stocks fell on Thursday morning on diminishing hopes for a fiscal stimulus deal before the election and an unexpected increase in weekly unemployment claims. The Labor Department said that initial claims for state unemployment benefits rose to 898,000 for the week ended October 10, up from 845,000 a week earlier and above the Bloomberg consensus forecast of 825,000. The Dow fell 0.4%, the S&P 0.6%, and the Nasdaq 0.9%. Crude oil traded near $40 per barrel, while gold fell $9 to $1891 per ounce.