Tuesday July 28th

28-07-2020

Dow futures drop more than 100 points as McDonald’s falls, GOP unveils coronavirus relief plan

U.S. stock index futures fell slightly as traders pored over the latest batch of corporate earnings results and the GOP coronavirus relief plan. Dow Jones Industrial Average were down 136 points, or 0.5%. S&P 500 and Nasdaq 100 futures slid 0.4% and 0.5%, respectively. McDonald’s shares slid 2.1% in the premarket after the fast-food giant posted a quarterly profit that missed analyst expectations along with a 30% drop in overall revenue. 3M, another Dow component, dropped 2.7% after its quarterly earnings and revenue were lower than expected. Visa, Advanced Micro Devices, Amgen, eBay, Mondelez International and Starbucks report after the bell on Tuesday.  This is the busiest week of the corporate earnings season, with about 170 companies slated to report. Senate Majority Leader Mitch McConnell unveiled the Republican coronavirus relief plan Monday after the bell.  The legislation would include relief for jobless Americans, another direct payment to individuals of up $1,200, more Paycheck Protection Program small business loan funds, among other provisions. McConnell said the bill would set federal unemployment insurance at 70% of a worker’s previous wages, replacing the $600 per week which states stopped paying out this week. “The cutting of the unemployment benefits is setting us up for a political battle and that could take time,” said Peter Cardillo, chief market economist at Spartan Capital Securities, noting this is weighing on market sentiment. The bill comes as coronavirus cases continue to rise across the U.S. So far, more than 4.2 million infections have been confirmed along with at least 147,303 deaths in the U.S., according to Johns Hopkins University. Meanwhile, the Federal Reserve starts its two-day policy meeting on Tuesday, followed by an interest rate decision on Wednesday. The FOMC decided to maintain the target range for the federal funds rate at 0-0.25% at its last meeting in June as it continued to deal with the impact of the coronavirus (COVID-19) pandemic on the U.S. economy. Wall Street was coming off a solid session, helped by gains in technology darlings. Gold prices soared to a new record high on Monday. Spot gold traded as high as $1,943.927, surpassing the previous record high price set in September 2011. “With the U.S. dollar down, it is a day when everything from stocks, commodities, bond yields and gold are higher,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. Stocks in Asia Pacific were mixed on Tuesday afternoon trade as gold prices dipped from their record levels. Shares in South Korea led gains among the region’s major markets, with the Kospi up 1.76% to close at 2,256.99 as shares of industry heavyweight Samsung Electronics soared 5.4%. Mainland Chinese stocks were also higher on the day, with the Shanghai composite gaining 0.71% to around 3,227.96 while the Shenzhen component jumped 1.314% to about 13,147.35. Hong Kong’s Hang Seng index added 0.69%, as of its final hour of trading. Over in Japan, stocks lagged the overall region as the Nikkei 225 dipped 0.26% to close at 22,657.38 while the Topix index shed 0.48% to finish its trading day at 1,569.12. Oil prices were steady on Tuesday as hopes for additional U.S. measures to stimulate the economy countered a demand outlook dampened by rising of coronavirus cases across the globe. Brent crude was up 13 cents, or 0.3%, at $43.54 a barrel, while West Texas Intermediate crude fell 11 cents, or 0.3%, to $41.49 a barrel. Gold pared gains on Tuesday after a record run as the dollar regained some ground, although U.S.-China tension and bets for the U.S. Federal Reserve to reiterate a dovish policy stance underpinned the metal’s safe-haven appeal. Spot gold was up 0.1% at $1,943.14 by 0507 GMT, but off its peak of $1,980.57 per ounce, with the dip also attributed to profit-taking. U.S. gold futures rose 0.2% to $1,934.90. Silver also trimmed gains and was up 0.7%, after rising as much as 6.4% to $26.19 per ounce.