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Updated: September 28, 2020

Stocks rally on hopes for a stimulus package

The New York Stock Exchange

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.

The Dow opened up 1.3%, or 365 points, while the broader S&P 500 rose 1.4%. The gains come after four consecutive weeks of losses.

The Nasdaq Composite opened up 1.5%.

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.

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.

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 more or less flat Monday but 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.

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