Wednesday October 14th

14-10-2020

Stock futures are flat as traders monitor earnings, stimulus talks

U.S. stock index futures were flat on Wednesday as traders pored through another batch of corporate earnings. Futures contracts tied to the Dow Jones Industrial Average rose just 39 points, or 0.1%. S&P 500 futures fell marginally and Nasdaq 100 futures gained 0.1%. The corporate earnings season continued on Wednesday as Bank of America and Goldman Sachs released their latest quarterly numbers on Wednesday along with UnitedHealth and Wells Fargo. Bank of America’s earnings topped analyst expectations but the bank’s revenue missed the mark, sending the stock down 2%. Goldman, meanwhile, reported much better-than-expected earnings and the stock rose 2.7%. UnitedHealth shares gained 0.8% after the Dow component reported better-than-expected earnings and revenue for the previous quarter. Wells Fargo shares dipped more than 1% as the bank’s third-quarter earnings missed expectations. The bank said its bottom line was impacted by the current low interest rate environment. Stocks fell on Tuesday, snapping a four-day winning streak. The Dow Jones Industrial Average slid 157.71 points, or 0.6%, while the S&P 500 declined 0.6%. The Nasdaq Composite was the relative outperformer, dipping 0.1%. The decline came amid a number of headwinds. Eli Lilly said Tuesday afternoon that it would pause its trial of a coronavirus antibody treatment, news that followed Johnson & Johnson’s earlier announcement that it halted its vaccine trial after an “adverse event” was reported. Additionally, hopes for near-term stimulus have faded as Democrats and Republicans remain at odds. The White House recently proposed $1.8 trillion for an aid package, which House Speaker Nancy Pelosi said “falls significantly short” of what is needed. On Tuesday, Senate Majority Leader Mitch McConnell said that the Senate will vote on a limited stimulus bill later this month, which will be “targeted relief for American workers, including new funding” for Paycheck Protection Program small business loans. Despite Tuesday’s dip, stocks are higher for October, with the Dow up more than 3% while the S&P 500 and Nasdaq have gained more than 4% and 6%, respectively. “Markets are now hoping for (and trading on) a smooth election, a big stimulus, the end of the pandemic, and the economy being back to 2019 normal early next year,” said Brad McMillan, chief investment officer at $200 billion Commonwealth Financial Network. However, he noted that the market’s optimism might make it vulnerable to bad news, especially as Covid-19 cases spike in some areas. “While the economy continues to recover, job growth has slowed substantially even as layoffs remain very high—and we are still only halfway back to pre-pandemic employment levels,” he added. Stocks in Asia-Pacific were lower on Wednesday, as investors reacted to a speech from Chinese President Xi Jinping. Mainland Chinese stocks were lower on the day, with the Shanghai composite down 0.56% to about 3,340.78 while the Shenzhen component declined 0.779% to around 13,691.04. The Hang Seng index in Hong Kong closed fractionally higher at 24,667.09. In Japan, the Nikkei 225 bucked the overall trend among the region’s major markets as it rose 0.11% to close at 23,626.73 while the Topix index shed 0.32% to end its trading day at 1,643.90. South Korea’s Kospi declined 0.94% to close at 2,380.48. Oil prices slipped on Wednesday on concerns that fuel demand will continue to falter as rising coronavirus cases across Europe and in the United States, the world’s biggest oil consumer, could impede economic growth. The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report on Tuesday that oil demand in 2021 will rise by 6.54 million barrels per day (bpd) to 96.84 million bpd, 80,000 bpd less than its forecast a month ago, as a result of the economic dislocations caused by the coronavirus pandemic. Brent crude futures for December fell by 12 cents, or 0.3%, to $42.33 a barrel by 0355 GMT while U.S. West Texas Intermediate futures were down 11 cents, or 0.3%, to $40.09. Gold firmed on Wednesday after last session’s sharp drop spurred demand for the safe-haven metal from investors worried about global economic recovery and uncertainty surrounding next month’s U.S. presidential election. Spot gold was up 0.2% to $1,895.41 per ounce by 0947 GMT, after shedding as much as 1.9% on Tuesday in reaction to the dollar’s jump. U.S. gold futures gained 0.2% to $1,899.20.