Investing.com – U.S. stocks are set to open higher Friday, rebounding after recent losses, shrugging off both recent economic data that has pointed to a slowing recovery and the receding likelihood of additional fiscal stimulus.
On Thursday, the Dow Jones Industrial Average fell 1.3%, or 370 points. The S&P 500 was down 1.6%, while the Nasdaq Composite fell 2%. The three major indexes have dropped in four of the last five sessions, with the DJIA and the S&P set to post their weakest week since June and the Nasdaq since March.
The steep tech selloff has cast doubt on whether stretched valuations can be sustained, at a time when joblessness is still high and the coronavirus is still threatening economic activity. Applications for state unemployment benefits failed to decline as expected last week, calling into question the strength of the economic recovery.
At the same time, the Senate failed to pass a bill that would have provided around $300 billion in new coronavirus aid. Time is running out ahead of the congressional and presidential elections for the two main parties to find some form of compromise.
That said, Goldman Sachs (NYSE:GS) is optimistic, saying the tech-led Nasdaq correction “has primarily been a reversal of the summer rally.”
The influential investment bank upgraded its global equity allocations to ‘overweight’ for the next three months, citing an inflection in earnings growth and catch-up moves by cyclical stocks, which had lagged the summer rally.