Midday Comment — Thursday, October 22, 2020
DJIA: 28,186.20, down 24.62
S&P 500: 3,432.90, down 2.66
Nasdaq Composite: 11,439.88, down 44.82
Stocks Fall; Earnings, Data in Focus
Stocks are lower Thursday, as investors digest generally upbeat economic data and corporate earnings releases. Fiscal stimulus updates are also in focus with talks between the White House and Democrats expected to resume today. House Speaker Nancy Pelosi is boosting investors sentiment after suggesting a stimulus deal is “just about there.” The Dow is off 24 points, while the S&P 500 is ticking down 0.1%. The Nasdaq Composite is slipping 0.5%.
Six of 11 S&P 500 sectors are trading in positive territory with Energy and Financial stocks pacing gains. In earnings, Coca-Cola is adding 1.1% after beating analyst estimates on both the top and bottom line. AT&T is jumping 4.9% after noting that subscribers for its HBO and HBO Max streaming services topped its own estimates. Meanwhile, shares of American Airlines are adding 1.1%, while Southwest Airlines is gaining 4.8% after both companies reported quarterly losses that were better than feared. Tesla is rising 2.0% after beating Wall Street’s earnings and revenue estimate while reporting its fifth consecutive quarter of profits and reaffirming its projected delivery outlook. In the gaming space, Las Vegas Sands is jumping 6.4% amid a “positive recovery trajectory” overseas with domestic results contributing to better than expected numbers.
On the data front, initial jobless claims declined to 787,000 in the most recent week, below expectations of 870,000 and last week’s downwardly revised 842,000 figure. An update on September existing home sales surged to its highest level in 14 years as record low mortgage rates continue to attract buyers. Treasuries are mixed, with the yield on the 10-year note up three basis point to 0.84%.
Opening Comment — Thursday, October 22, 2020
S&P 500: 3,435.56
Nasdaq Composite: 11,484.69
Stocks Poised to Open Lower on Thursday
U.S. stock futures are pointing to a lower open on Thursday, as investors digest the weekly jobless claims figure and a flurry of corporate earnings reports. Fiscal stimulus updates will remain in focus with negotiations expected to resume today. Yesterday, investors weighed House Speaker Nancy Pelosi’s upbeat tone about the state of talks with Treasury Secretary Steven Mnuchin, saying she “has a prospect for an agreement.” Still, market participants tempered their optimism as each day without an agreement narrows the chance of the bill reaching both chambers of Congress before the November 3 election. This morning, the Dow, S&P 500, and Nasdaq 100 are each down 0.1% in pre-market action.
In earnings, Coca-Cola is adding 2.5% after beating analyst estimates on both the top and bottom line. AT&T is rising 3.5% after noting that subscribers for its HBO and HBO Max streaming services topped its own estimates. Meanwhile, shares of American Airlines are declining 2.1%, while Southwest Airlines is gaining 0.7% after both companies reported quarterly losses that were better than feared. Tesla is jumping 4.4% after beating Wall Street’s earnings and revenue estimate and reporting its fifth consecutive quarter of profits.
On the data front, initial jobless claims declined to 787,000 in the most recent week, below expectations of 870,000 and last week’s downwardly revised 842,000 figure. Treasuries little changed, with the yield on the 10-year note holding steady at 0.81%. Overnight in Asia, Japan’s Nikkei 225 slipped 0.7%, while China’s Shanghai Composite fell 0.4%. Across the pond, the Euro STOXX 600 is off 0.1% near lunchtime.
Closing Comment — Wednesday, October 21, 2020
DJIA: 28,210.82, down 97.97
S&P 500: 3,435.56, down 7.56
Nasdaq Composite: 11,484.70, down 31.80
Stocks Modestly Decline; Earnings in Focus
U.S. equities ended the lower in choppy trading Wednesday, as investors digested a slew of earnings reports and monitored progress on the fiscal stimulus front. Yesterday, House Speaker Nancy Pelosi expressed optimism after reportedly narrowing differences during discussions with Treasury Secretary Steven Mnuchin. Talks continued today with Pelosi striking an upbeat tone about the state of negotiations, saying she “has a prospect for an agreement.” The Dow slipped 97 points, while the S&P 500 edged down 0.2%. The Nasdaq Composite declined 0.3%.
Nine of 11 S&P 500 sectors finished the day in negative territory. Energy stocks posted the largest declines as WTI crude dropped 4.0% to $40.03/barrel amid inventory data showing a decline in demand for refined products, such as gasoline. In earnings, Netflix slid nearly 7.0% after the streaming giant’s subscriber growth metric fell short of analysts’ projections. Meanwhile, Snap surged 28.3% after reporting a surprise profit in the third quarter and exceeding Wall Street’s forecast for daily active users. Positive results from the social media company provided a tailwind for Facebook and Twitter each adding 4.2% and 8.4%, respectively. In other corporate news, PayPal jumped more than 5.0% after launching a new cryptocurrency service on its platform.
Today’s lone economic release showed MBA mortgage applications dipped 0.6% in the most recent week. In central bank news, the Federal Reserve released its Beige Book showed economic activity increased at slight to modest levels across all districts. Treasuries weakened, with the yield on the 10-year Treasury adding two basis points to 0.81%, the highest level since June.