Dow Jones Industrial Average Jumps 304 Points; S&P Makes It 5 in a Row

Why the Overbought VIX Trade Still Works

by Karee Venema

Published on Oct 5, 2015 at 4:26 PM

It was a big day on Wall Street today, with all three major indexes scoring solid wins. Not only did the Dow Jones Industrial Average (DJIA) climb out of correction territory -- thanks to rallies from a pair of blue-chip heavyweights -- but the Nasdaq Composite (COMP) jumped back above its year-to-date breakeven line. Additionally, the S&P 500 Index (SPX) took a big step in proving that past can be precedent -- and extended its gains to a fifth consecutive session to notch its longest win streak since last December.

With a relatively bare economic and earnings calendar, today's pop came courtesy of a technical boost, as indexes continued to bounce off August lows. However, a handful of market-moving macro events are on this week's docket -- including hints to the Fed's recent interest-rate decision and a fresh batch of quarterly earnings -- so, more volatility is likely ahead.

Continue reading for more on today's market, including:

 

The Dow Jones Industrial Average (DJIA - 16,776.43) was 326 points higher at its session peak -- and settled not too far from there, up 304 points, or 1.9%. Twenty-nine of the Dow's 30 components gained ground, led by 5.3% pops for General Electric Company (NYSE:GE) and Caterpillar Inc. (NYSE:CAT). Nike Inc (NYSE:NKE) was the lone laggard, shedding 0.8%.
 
The S&P 500 Index (SPX - 1,987.05) added 35.7 points, or 1.8%, while the Nasdaq Composite (COMP - 4,781.26) jumped 73.5 points, or 1.6%.

The CBOE Volatility Index (VIX - 19.54) gave back 1.4 points, or 6.7%, to close at its lowest level since Aug. 20.



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5 Items on Our Radar Today:

  1. The Institute for Supply Management's (ISM) non-manufacturing purchasing managers index fell to 56.9 in September from 59 in August. In July, the reading topped out at a record high of 60.3. (FOX Business)
  2. The Justice Department ordered BP to pay $20 billion to settle claims regarding the 2010 Deepwater Horizon oil spill. This is the largest fine in the court's history, and still needs to be approved by a federal judge. (ABC News)
  3. Despite getting slapped with a price-target cut, DE jumped 6.4% on news of a big win with United Auto Workers.
  4. How weekly option traders have been lining up on these 2 energy issues.
  5. Stifel took note of this network equipment specialist's surge up the charts.


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Commodities:

 

Crude oil started the week on a strong note, thanks to stimulus hopes from overseas and reports that Russia is willing to meet with both OPEC and non-OPEC oil producers. By the close, crude for November delivery was up 72 cents, or 1.6%, at $46.26 per barrel.

Gold, meanwhile, rose for a second straight session, with the December-dated contract settling up $1, or 0.1%, at $1,137.60 per ounce.


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