Wednesday September 23rd


Dow futures jump 160 points continuing rebound from September sell-off; Nike shares rise

U.S. stock index futures were solidly higher again early Wednesday after the S&P 500 experienced its first positive day in five trading sessions. Dow Jones Industrial Average futures received a boost from a blowout earnings report from component Nike. Dow futures rose 169 points, or 0.6%. S&P 500 futures added 0.4%. Nasdaq-100 futures were marginally lower, however. Nike’s stock jumped 12.1% in premarket trading as the company said digital sales surged more than 80% last quarter. Earnings and sales blew past analysts expectations last quarter and the company gave a forecast for growth in the new fiscal year. Airlines and cruise lines gained in premarket trading after President Donald Trump said the U.S. would not be implementing a second round of lockdowns as the U.K. began imposing stricter measures. “The U.K. just shut down again. They just announced that they’re going to do a shutdown, and we’re not going to be doing that,” Trump said. United Airlines and Delta were up more than 1%. Carnival gained 1.9%. Johnson & Johnson started a phase 3 trial of its coronavirus vaccine. J&J shares were up 2.3%. The House passed a bill avoiding a government shutdown. Key tech stocks Amazon, Apple and Microsoft were slightly higher in premarket trading. Tech stocks have been the center of the September sell-off. Shares of Tesla fell 3.1% in premarket trading after Elon Musk offered new delivery predictions for 2020 and detailed a new battery design that it claims will make its cars cheaper to produce. On Tuesday, the major averages snapped multi-day losing streaks, all closing in the green. The Dow Jones Industrial Average climbed 140 points and the S&P 500 climbed 1.1%. The technology-heavy Nasdaq Composite was the relative outperformer, popping 1.7% as Amazon surged 5.7%. “As soon as the S&P 500 reached the official correction zone near a 10% decline... ‘dip buyers’ emerged and have been evident ever since,” Jim Paulsen, chief investment strategist at The Leuthold Group, told CNBC. “These buyers, armed with cash holdings, may be driven less by the ‘fear of missing out’ than they are by the ‘opportunity to finally get in.’” Shares of megacap technology stocks — which have suffered in September — all closed in positive territory on Tuesday. “Optimism broadened as the day progressed lifting not only technology and communications stocks for the second day, but ending with eight of the 11 sectors within the S&P 500 Index in the green,” added Paulsen. Stock gains were capped by concerns about an uptick in coronavirus cases in the U.K. paired with bleaker outlook for a second stimulus bill from the United States Congress. U.K. Prime Minister Boris Johnson announced Tuesday a tightening of economic restrictions and public health measures to slow the spread of Covid-19. Johnson said that the country was at a “perilous turning point.” U.S. coronavirus deaths topped 200,000 on Tuesday, according to data compiled by Johns Hopkins University. With stimulus plans at a stalemate in Washington, Federal Reserve Chairman Jerome Powell on Tuesday reiterated to lawmakers that the U.S. economy could begin to decelerate in the months ahead without further fiscal stimulus from Congress. Powell told the House Financial Services Committee that many economic forecasts underlies fiscal action. Powell also reassured investors that the central bank will support the economy “for as long as it takes.” Powell will testify again on Wednesday to Congress’s Select Subcommittee on the Coronavirus Crisis. September continues to be a weak month for stocks with all three averages posting three straight weeks of losses. The Dow is down more than 4% in September and the S&P 500 and Nasdaq Composite have lost 5.3% and 6.9% this month, respectively. “We think equities will move higher over the medium term, thanks to the likely development of a successful vaccine, an end to election uncertainty, the passage of new US fiscal stimulus, and continued extraordinary global monetary support,” said Mark Haefele, UBS Global Wealth Management chief investment officer. “However, the path to ‘more normal’ is likely to be bumpy amid uncertainty over the coronavirus, the U.S. political environment, and U.S.-China tensions. We therefore expect volatility to persist over the balance of the year.” Stocks in Asia-Pacific were mixed on Wednesday as investors reacted to recent comments from Federal Reserve Chairman Jerome Powell. Mainland Chinese stocks were also higher on the day, with the Shanghai composite up 0.17% to about 3,279.71 while the Shenzhen component added 0.665% to roughly 13,110.07. Hong Kong’s Hang Seng index was gained 0.11% to end its trading day at 23,742.51. Elsewhere, South Korea’s Kospi closed above the flatline at 2,333.24, following Tuesday’s decline of more than 2%. Stocks in Japan were edged lower on their first trading day of the week following holidays on Monday and Tuesday. The Nikkei 225 slipped fractionally to 23,346.49 while the Topix index dipped 0.13% to 1,644.25. Oil prices fell on Wednesday after an industry group reported a surprise rise in U.S. crude, adding to worries about demand that led to a steep selloff earlier in the week. Brent crude was trading down 30 cents, or 0.7%, at $41.42 a barrel by 0347 GMT, after gaining 28 cents on Tuesday, while U.S. crude dropped 34 cents, or 0.9%, to $39.46. Both contracts fell more than 4% on Monday, the most in two weeks. Gold fell for a second straight session on Tuesday as the dollar climbed to a near two-month peak, with investors keeping a close eye on remarks from U.S. Federal Reserve officials on the state of the economy. The path ahead for the economy remains uncertain and the U.S. central bank will do more if needed, Federal Reserve Chair Jerome Powell told a congressional panel on Tuesday. Separately, Chicago Federal Reserve President Charles Evans said the U.S. economy risks recession, if the U.S. Congress fails to pass a fiscal package. Spot gold had fallen 0.4% to $1,904.34 per ounce, reversing earlier gains. U.S. gold futures settled down 0.2% at 1,907.60 per ounce. A steep sell-off across asset classes on Monday dragged gold down to its lowest level since Aug. 12, at $1,882.70.