Friday November 19th

19-11-2021

Dow futures slide as European Covid woes dent global sentiment; tech shares higher

U.S. stock index futures were mixed early Friday as concerns over a resurgence of Covid-19 weighed on global markets, though tech shares pushed higher. Futures on the Dow Jones Industrial Average fell 202 points, or 0.5%, reversing course having earlier been in positive territory. S&P 500 futures fell 0.2% and Nasdaq 100 futures gained 0.4%. Markets were roiled after Austria announced on Friday morning that it would re-enter a full national lockdown due to a resurgence of Covid-19. Germany on Thursday announced more restrictions for unvaccinated people as a fourth wave sent daily cases to a record high. The market rally appeared to have slowed down a bit near record levels even amid strong corporate earnings. Macy’s and Kohl’s both blew past analyst estimates in their quarterly earnings reports on Thursday. Intuit shares roared nearly 10% higher premarket after the tech platform’s earnings blew past estimates and the company raised full-year revenue guidance. NVIDIA continued its strong run, with shares rising 1.8% on continued momentum from its earnings beat earlier this week. On the downside, big energy companies were mostly lower as oil prices continued their recent slump, with West Texas Intermediate falling about 2.5%. Occidental Petroleum led the declines, falling 3% in premarket trading Friday. So far this week, the blue chip Dow is down 0.6%, on pace for its second negative week in a row. The S&P 500 and the tech-heavy Nasdaq Composite are headed for modest gains, up 0.5% and 0.8% this week, respectively. The S&P 500 is on track for it sixth positive week in seven, sitting 0.3% below its all-time high. More than 90% of the S&P 500 companies have handed in their financial results for the third quarter, and over 80% of them reported earnings better than Street’s expectations, according to Refinitiv. S&P 500 companies are on track to grow profit by 41.5% year over year. “Better than expected earnings has been the name of the game this week for the market,” Mike Loewengart, managing director of investment strategy at E-Trade Financial. “While investors may have entered earnings season with some trepidation, there are some clear signs that consumers are resilient and corporate balance sheets are strong despite pricing pressures.” On Thursday, investors digested U.S. jobless claims data that more or less matched expectations. Initial filings for unemployment insurance fell slightly to 268,000 for the week ending Nov. 13, the lowest level since March 2020, and the seventh straight weekly decline. Economists polled by Dow Jones expected them to have fallen to 260,000. “With jobless claims hovering around pre-pandemic lows, the question now is will the momentum continue— both in terms of our economic recovery and market trajectory,” Loewengart said. Investors are also keeping an eye on President Joe Biden’s pick for the next Federal Reserve chair, which he is expected to unveil by the weekend. Many expect an even more dovish Fed if Lael Brainard is named the central bank chief, meaning it would take longer to raise interest rates or tighten policy than under Jerome Powell. In Washington, the House is trying to approve the $1.75 trillion Build Back Better economic package this week. The Senate then plans to take up the legislation after it returns from a Thanksgiving recess. Hong Kong shares fell Friday, extending losses from the previous session as some of China’s biggest tech names remained under pressure. The benchmark Hang Seng index declined 1.07% to 25,049.97 while the tech-focused Hang Seng tech index dropped 0.26% to 6,457.97. Alibaba’s U.S.-listed shares fell 11.1% on Thursday. Broadly, shares traded mixed across Asia-Pacific. Mainland Chinese stocks rose: The Shanghai composite added 1.13% to 3,560.37, while the Shenzhen component jumped 1.19% to 14,752.49. In Japan, the benchmark Nikkei 225 rose 0.5% to 29,745.87, while the Topix was up 0.44% to 2,044.53. South Korea’s Kospi added 0.8% to 2,971.02. Oil prices dropped below $79 a barrel on Friday as a fresh surge in COVID-19 cases in Europe threatened to slow the economic recovery while investors also weighed a potential release of crude reserves by major economies to cool energy prices. Brent crude was down $2.84, or 3.5%, at $78.40 a barrel, its lowest since early October, after earlier rising to as high as $82.24, extending volatility seen on Thursday. U.S. West Texas Intermediate (WTI) crude for December delivery was down $2.65, or 3.4%, at $76.36 a barrel. Gold edged higher on Friday as rising inflation buoyed its safe-haven appeal, although a stronger dollar and expectations that central banks would hike interest rates kept bullion on course for its first weekly decline in three. Spot gold rose 0.1% to $1,860.20 per ounce by 0956 GMT. U.S. gold futures gained 0.2% at $1,864.30.