(Bloomberg) — U.S. stocks retreated from almost five-week highs after House Speaker Nancy Pelosi dampened expectations for more fiscal stimulus. Treasury yields edged lower and the dollar weakened.

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The S&P 500 remained higher for a second day after President Donald Trump touted progress in talks even though there were few signs the two sides are any closer on a deal. Pelosi said there won’t be a standalone bill on airlines without a guarantee the other stimulus items are going to be addressed.

“The market is very dependent on stimulus talks,” said David Wagner, portfolio manager and analyst at Aptus Capital Advisors. “I think there is more dependence on that than the actual outcome and policy changes from a change in the administration.”

Eaton Vance Corp. leaped after the investment firm agreed to be taken over by Morgan Stanley. IBM surged after saying it will spin off its infrastructure unit. Regeneron Pharmaceuticals Inc. rose after Trump said its antibody cocktail was the “key” to his quick recovery. The president said he would authorize its emergency use.



chart: Gauge of semiconductor stocks rises to 20-year relative high versus the S&P 500


© Bloomberg
Gauge of semiconductor stocks rises to 20-year relative high versus the S&P 500

Bulls are now back in control of a market that’s increasingly betting that a Joe Biden presidential victory and gains by Democrats in Congress will be good for equities. The scenario seems to be quelling volatility even as risks from a split in government to a resurgence of coronavirus cases threaten the economic rebound.

“The market is now almost treating Trump’s actions as a sideshow, and is much more firmly pricing Biden in the White House,” Mizuho strategists including Peter Chatwell wrote in a note.

Still, they warned investors against “getting bulled-up on Biden” and the possibility of Democrats winning in the November election, including the Senate. Trump said he won’t participate in a second presidential debate if it will be conducted virtually as a precaution against the spread of the coronavirus.

Meanwhile, countries continue to grapple with rising coronavirus infections. France reported a record number of new cases and Italy’s infections spiked to the highest since April.

Elsewhere in markets, airlines led European shares higher, helped by as optimism over a Covid-19 treatment. U.K. jet engine-maker Rolls-Royce Holdings Plc was on course of the best five-day performance on record, after shoring up its finances.

Crop futures are climbing as dry weather threatens planting in the Americas and Black Sea areas. Wheat has risen for five days and is trading near the highest level since 2015.

These are some of the main moves in markets:

Stocks
The S&P 500 Index rose 0.4% to 3,436.88 as of 11:39 a.m. New York time, the highest in almost five weeks.
The Dow Jones Industrial Average gained 0.3% to 28,335.31, the highest in five weeks.
The Nasdaq Composite Index increased 0.6% to 11,414.52, the highest in almost five weeks.
The Nasdaq 100 Index climbed 0.6% to 11,547.21.
The Stoxx Europe 600 Index jumped 0.8% to 368.31, the highest in almost three weeks.
Currencies
The Bloomberg Dollar Spot Index was little changed at 1,171.14.
The euro decreased 0.2% to $1.1752.
The Japanese yen was little changed at 105.99 per dollar.
Bonds
The yield on 10-year Treasuries fell two basis points to 0.77%.
The yield on 30-year Treasuries dipped two basis points to 1.56%.
Germany’s 10-year yield declined two basis points to -0.52%, the largest drop in more than a week.
Britain’s 10-year yield declined one basis point to 0.287%, the biggest fall in more than a week.
Commodities
West Texas Intermediate crude climbed 2.6% to $40.74 a barrel, the highest in almost three weeks.
Gold strengthened 0.6% to $1,888.98 an ounce.
Copper gained 0.2% to $3.04 a pound, the highest in more than two weeks.

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