Wednesday October 21st

21-10-2020

Dow futures are little changed as stimulus talks continue, Netflix shares fall after earnings miss

U.S. stock index futures were little changed early Wednesday after White House chief of staff Mark Meadows said that House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have made “good progress” on stimulus talks. He added, however, that they “still have a ways to go” before an agreement is reached. Futures contracts tied to the Dow Jones Industrial Average pointed to a slightly lower open. S&P 500 futures and Nasdaq-100 futures were also near breakeven. Following Pelosi and Mnuchin’s meeting on Tuesday, Meadows told CNBC’s “Closing Bell” that the two will talk again on Wednesday, and that he hopes to see “some kind of agreement before the weekend.” Mnuchin and Pelosi’s conversation Tuesday continued a last-minute attempt to hash out an agreement before the Nov. 3 election. Democrats and the Trump administration have struggled for months to overcome fundamental disagreements over additional stimulus measures — including the dollar amount — as the economy continues to feel the burden of the coronavirus pandemic. Stocks have been trading based on lawmakers’ perceived progress — or lack thereof — and on Tuesday finished the session higher after Pelosi told Bloomberg TV that she’s “optimistic” about a potential aid deal. Goldman Sachs economist Alec Phillips noted, however, that “the biggest issues remain unresolved and a deal doesn’t seem particularly close.” “With big differences and little time, it seems unlikely that Pelosi and Mnuchin will reach a deal before the election. More importantly, even if a deal in principle is announced in coming days — this seems possible, but not likely — it looks very unlikely that it would pass before Election Day,” he added. And even if the White House and Democrats hatch a deal, Senate Majority Leader Mitch McConnell would need to bring the bill to the Senate floor in time. McConnell told his caucus Tuesday in a private lunch that he is encouraging the administration not to agree to a stimulus bill as he worries about dividing Republicans on major legislation days before an election, NBC News reported. The Dow Jones Industrial Average finished the session 0.4%, or 113.37 points, higher. At one point during the session the 30-stock average had been up more than 300 points. The S&P 500 gained 0.5% to end the day at 3,443.12, while the Nasdaq Composite advanced 0.3% to close at 11,516.49. “The back and forth political discussions on the stimulus deal and continued election uncertainty give us extra justification for short-term market uneasiness,” said David Bahnsen, chief investment strategist at The Bahnsen Group, which oversees $2.5 billion in client assets. “Very few market actors actually doubt that some fiscal relief bill is coming. The question is purely when, and of what composition,” he added. A slew of companies reported quarterly earnings after the bell on Tuesday, most notably Netflix. Shares of the streaming giant slipped 5.7% after the company missed earnings estimates, and reported fewer-than-expected subscriber additions. On the other hand, shares of Snap jumped 24% after the company reported a surprise earnings beat. Looking ahead to Wednesday Biogen, AutoNation, Baker Hughes and Abbott Labs are among the names set to report ahead of the opening bell. After the market closes Tesla will release its third quarter results, with CSX, Las Vegas Sands and Chipotle Mexican Grill also on deck. Stocks in Asia-Pacific were mixed on Wednesday as investors continued to watch for developments on U.S. coronavirus stimulus talks. Mainland Chinese stocks were lower on the day, with the Shanghai composite down fractionally to about 3,325.02 while the Shenzhen component slipped 0.999% to around 13,467.91. Hong Kong’s Hang Seng index, on the other hand, advanced 0.75% to close at 24,754.42. In Japan, the Nikkei 225 added 0.31% to close at 23,639.46 while the Topix index gained 0.73% to finish its trading day at 1,637.60. South Korea’s Kospi rose 0.53% to close at 2,370.86. Oil prices fell on Wednesday after a surprise climb in U.S. crude stockpiles added to concerns about a global supply glut as a spike in global Covid-19 cases fuels demand fears and production returns in Libya. Brent crude futures for December delivery were at $42.94 a barrel, down 22 cents, or 0.5%, as of 0035 GMT, while December U.S. West Texas Intermediate (WTI) crude futures slipped 23 cents, or 0.7%, to $41.47 a barrel. Both benchmarks gained the previous session. Gold prices rose to a one-week high on Wednesday as the dollar weakened on renewed hopes for a new U.S. stimulus package ahead of next month’s election. Spot gold was up 0.5% at $1,915.66 per ounce, after hitting its highest since Oct. 13. U.S. gold futures rose 0.2% to $1,919.20 per ounce.