Thursday October 15th

15-10-2020

Stocks are set to fall for a third day as Dow futures slide more than 300 points

U.S. stock index futures were lower on Thursday, pointing to a third straight day of losses for the U.S. stock market. Dow Jones Industrial Average futures were down 350 points, or 1.2%. S&P 500 futures lost 1.2%. Nasdaq 100 futures dropped 1.6% as shares of big technology companies slid. Investors are waiting for any sign a coronavirus aid deal is still possible. Treasury Secretary Steven Mnuchin told CNBC’s “Squawk Box” that he and President Donald Trump are committed to getting a stimulus deal done and that while it will be hard to get one done before the election, they will keep trying. Mnuchin, who plans to speak with House Speaker Nancy Pelosi again Thursday, said progress has been made, specifically in reference to Democrats’ testing language for the deal. However, he said that “politics” may be getting in the way and that the Democrats still want an “all or nothing” deal. Futures extended losses after the weekly jobless claims came in worse than expected. The Labor Department said Thursday 898,000 new claims were filed for jobless benefits in the prior week, higher than a Dow Jones estimate of 830,000. European governments are reinstituting pandemic restrictions to curb a second wave of the coronavirus. France has declared a public health state of emergency and the U.K. is nearing a second national lockdown. European stock benchmarks lost more than 2%. France and Netherlands are endorsing a plan for the EU to curb the power of Big Tech, including by possibly breaking them up, according to the Financial Times. Facebook, Apple and Alphabet shares were each lower by about 2% in premarket trading following the report. Third-quarter earnings are continuing to roll out. Morgan Stanley reported third quarter profit of $1.66 per share, exceeding the $1.28 estimate of analysts surveyed by Refinitiv. It generated revenue of $11.7 billion on the back of strong trading, a billion dollars more than the estimate. Shares of Morgan Stanley dipped 0.5% in premarket trading. Walgreens also posted a better-than-expected fourth-quarter profit, helped by higher sales at U.S. pharmacies. The drugstore chain said it expects profit to grow in single digits in 2021. Shares of Walgreens popped 1.7% in premarket. Banking giants Goldman Sachs, Wells Fargo and Bank of America reported their latest quarterly results on Wednesday along with United Airlines. Goldman and Bank of America’s results topped analyst expectations. However, Wells Fargo and United fell short of estimates. “Market volatility is set to continue in the weeks ahead as investors brace for a host of uncertainties—the timing of vaccine availability (after a setback for Johnson & Johnson), the size and timing of additional US fiscal stimulus, and the election outcome,” wrote Mark Haefele, chief investment officer of global wealth management at UBS. “The uneven recovery in the US economy also adds to investor concerns as the results season kicked off this week.” The uncertainty surrounding the aid talks led to the market’s second straight daily decline Wednesday. The Dow slid more than 160 points, or 0.6%. The S&P 500 and Nasdaq Composite pulled back by 0.7% and 0.8%, respectively. Wednesday marked the first time since September that the major indexes posted consecutive daily losses. “This is the second earnings season in the wake of the Covid-19 pandemic ... and arguably this will be one of the most important earnings seasons ever,” wrote Jeff Kilburg, CEO at KKM Financial. “As investors globally try to gauge the actual damage inflicted upon the economy by Covid-19, expectations are simply that earnings will not be as bad as they were in Q2.” “In the event we have an overall positive tone transmitted, I believe the path for U.S. equites is higher,” Kilburg added. Stocks in Asia-Pacific were mostly lower on Thursday, while shares of K-pop superstars BTS’ label, Big Hit Entertainment, surged on the first day of trading. In the broader markets, South Korea’s Kospi slipped 0.81% to close at 2,361.21. Hong Kong’s Hang Seng index led losses among the region’s major markets as it dropped 2.06% on the day to 24,158.54. Japan’s Nikkei 225 declined 0.51% to finish its trading day at 23,507.23 while the Topix index shed 0.74% to close at 1,631.79. Mainland Chinese stocks closed lower, with the Shanghai composite down 0.26% to about 3,332.18 while the Shenzhen component slipped 0.483% to around 13,624.89. Oil prices fell on Thursday as new restrictions to stem a surge in COVID-19 infections have increased uncertainty over the outlook for economic growth and a recovery in fuel demand. Brent crude futures dropped $1.48, or 3.44%, to trade at $41.83 per barrel, while West Texas Intermediate crude futures were down $1.49, or 3.63%, to trade at $39.55 per barrel. Gold fell on Thursday as the dollar gained after U.S. Treasury Secretary Steve Mnuchin dimmed hopes for a new fiscal stimulus package before the Nov. 3 presidential election. Spot gold fell 0.5% to $1,891.81 per ounce, after rising as much as 1.2% on Wednesday. U.S. gold futures were down 0.6% at $1,895.20 per ounce.