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Sep 29, 2020

US Market Closing ReportStocks fall, snap 3-day winning streak amid coronavirus concerns

 

Fred Imbert, Jesse Pound


Stocks fell for the first time in four days on Tuesday amid renewed concern over the coronavirus outbreak in New York City.

The Dow Jones Industrial Average traded 72 points lower, or 0.3%. The S&P 500 also dipped 0.3% while the Nasdaq Composite slid 0.1%. Those losses put the major averages on pace to snap a three-day winning streak. 

Shares of airline companies led the declines. JetBlue dropped 5% and American Airlines slid 4%. United dipped more than 3% and Southwest traded lower by 1.8%.

The major averages fell to their lows of the day after New York City Mayor Bill de Blasio said the city’s daily positive rate of coronavirus tests is back above 3% for the first time in months.

“We’re not out of the woods yet in terms of the coronavirus,” said Peter Cardillo, chief market economist at Spartan Capital Securities. He also noted some investors are taking profits after the market’s solid gains over the previous three sessions. 

Tuesday’s decline follows a strong start to the week for stocks during Monday’s session, with the Dow, S&P 500 and Nasdaq Composite popping more than 1% each.

However, September has been a tough month for traders, with the major averages headed for their first monthly decline since March. Month to date, the S&P 500 has dropped 4.4% and the Dow has lost 3.2%. The Nasdaq is down 5.6% over that time period as shares of big tech companies struggle. 

David Waddell, CEO of wealth strategist firm Waddell & Associates, said that he saw recent weakness for the market as a needed “comeuppance” for major tech stocks and that stocks were set for near-term volatility while the indexes tread water. 

“I think we’re in a sideways period. It’s just we’re going to do it like we’re on a trampoline,” Waddell said. The strategist also said his clients still had a large amount of their assets in cash, suggesting potential support for the market.

Traders also looked ahead to the first debate between President Donald Trump and Democratic nominee Joe Biden set for Tuesday night. Some Wall Street analysts believe the first debate of this cycle could be more consequential for the markets than most debates, with a clear victory by one candidate possibly creating significant market moves. 

“Everyone knows what they’re going to get with Trump, for better or worse,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “The question then is what will Biden deliver. If Biden doesn’t kick any balls in his own net then the market will take that as a win for him.”

Meanwhile, House Democrats unveiled a new $2.2 trillion stimulus package, smaller than the more than $3 trillion proposed earlier in the crisis but still well above what Republican leaders have offered. The new bill includes enhanced unemployment benefits and aid to airlines and state and local governments.

In economic news Tuesday, The Conference Board said consumer confidence jumped much more than expected, hitting a print of 101.8 for September. Economists polled by Dow Jones expected consumer confidence to rise to 90.1 from 86.3 in August. 

Don’t miss CNBC and Institutional Investor’s Delivering Alpha conference on September 30, featuring Treasury Secretary Steven Mnuchin, Senator Elizabeth Warren, Alibaba’s Joseph Tsai, Vista Equity Partners’ Robert Smith, J.P. Morgan’s Mary Callahan Erdoes, Inclusive Capital’s Jeff Ubben and more.

Currencies | The Dollar: Dollar slides in flows-driven market; investors await U.S. debate

 

3-4 minutes - Source: CNBC


U.S. dollar bank notes are arranged for a photograph on September 7, 2017 in Hong Kong.

U.S. dollar bank notes are arranged for a photograph on September 7, 2017 in Hong Kong.

studioEAST | Getty Images

The dollar on Tuesday fell from last week’s two-month highs, weighed down by currency flows in the options market as well as for month end, with investors also capitalizing on recent gains in the greenback ahead of the first debate between two U.S. presidential candidates.

“Today the market is mostly flows-driven, options-related and month-end flows that have pulled the dollar lower,” said Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto.

There were FX options-related flows that bet on the downside in the dollar versus the yen as well as the upside on the euro against the Japanese currency, Bregar said. The euro/yen options have pulled euro/dollar higher.

Some analysts also said investors may also be taking profits on recent dollar gains ahead of the first debate between President Donald Trump and Democratic challenger Joe Biden.

The 90-minute televised debate at 9 p.m. EDT (0100 GMT) will be watched by investors looking for guidance on the candidates’ prospects.

“The debate lurks as a potential catalyst for the dollar, particularly if the president can improve his underdog status,” said Steven Jon Colangelo, FX dealer at Western Union Business Solutions.

That said FX option traders are not pricing in any significant risk related to the debate. Implied volatility was no higher than it was early Monday, when options expired Tuesday - before the event.

In mid-morning trading, the dollar index fell 0.3% to 93.901 , after hitting a two-month peak on Friday.
The greenback also added to losses, as investors felt a little more confident getting out of the safe-haven currency after data showed U.S. consumer confidence rebounded more than expected in September, as households’ views of the labor market improved.

The euro firmed across the board, rising 0.5% against the dollar to $1.1727 and 0.6% versus the yen to 123.84 yen.

European Central Bank policymakers are increasingly divided over how to steer Europe’s economy through a second wave of COVID-19 infections.

The dollar fell to a one-week low against the Swiss franc and was last down 0.5% at 0.92 franc .
Markets were also waiting for developments in talks over aid for people affected by the coronavirus in the United States.

U.S. House of Representatives Speaker Nancy Pelosi said on Monday Democratic lawmakers were unveiling a new $2.2 trillion fiscal stimulus bill, which she said was a compromise and less costly as it covers a shorter period of time.

Sterling, meanwhile, rose on hopes for a Brexit deal and the Bank of England’s deputy governor saying he thought the floor for the central bank’s key interest rate was 0.1%.

The pound was last up 0.4% at $1.2883.

Commodities | Gold Price Report: Gold climbs to 1-week high on dollar slide, stimulus optimism

 

2-3 minutes - Source: CNBC


An employee arranges gold bars for a photograph at the YLG Bullion International headquarters in Bangkok, Thailand.

An employee arranges gold bars for a photograph at the YLG Bullion International headquarters in Bangkok, Thailand.

Dario Pignatelli | Bloomberg | Getty Images

Gold rose to its highest in a week on Tuesday as the dollar weakened and hopes rose for an additional fiscal stimulus for the American economy, ahead of the first U.S. presidential debate.

Spot gold gained 0.5% to $1,889.85 per ounce while U.S. gold futures climbed 0.7% to $1,895.70.

“As we see better prospects for stimulus, we understand there is a tendency to weaken the domestic currency, in this case weaken the dollar and support gold and silver,” said David Meger, director of metals trading at High Ridge Futures.

At this point, U.S. Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi “slowly coming to terms over the second stimulus plan is obviously a supportive environment,” he added.

Mnuchin and Pelosi are scheduled to speak on Tuesday about coronavirus relief legislation, White House economic adviser Larry Kudlow said.

This comes after Pelosi on Monday said Democratic lawmakers unveiled a new $2.2 trillion coronavirus relief bill.

Gold, seen as a hedge against inflation and currency depreciation, has gained about 24% so far this year on the back of monetary stimulus from major central banks and governments.

Helping gold, the dollar was down 0.4% against a basket of other major currencies as markets waited for the first presidential debate between President Donald Trump and Democratic rival, Joe Biden at 2100 ET (0100 GMT).

“The tide may be shifting slightly back to gold’s favor,” James Steel, chief precious metals analyst at HSBC said in a note.

“As the focus of the market shifts more decisively to the U.S. elections and the uncertainty that this election cycle brings, it looks like gold and silver have been given a reprieve from last week’s heavy liquidation.”

Silver rose 1.3% to $24.02 per ounce, platinum added 0.3% to $881.90 and palladium was 2.1% higher at $2,301.78.

Energy | Oil Price Report: Oil slides more than 3% as virus cases mount

 

2-3 minutes - Source: CNBC


Oil pumping jacks, also known as "nodding donkeys", operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.

Oil pumping jacks, also known as “nodding donkeys”, operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.

Andrey Rudakov | Bloomberg via Getty Images

Oil prices on Tuesday fell more than 3%, although closed off their lowest levels of the day, on worries about the outlook for fuel demand as Europe and the United States grappled with a surge in new coronavirus infections.

Stock and commodities investors remained cautious ahead of the first U.S. presidential debate between Democrat Joe Biden and Republican Donald Trump later on Tuesday.

The energy market was also waiting for weekly updates on U.S. crude stockpiles from the American Petroleum Institute (API) on Tuesday and the Energy Information Administration (EIA) on Wednesday.

Analysts polled by Reuters forecast U.S. crude inventories increased 1.6 million barrels last week.

On its second to last day as the front-month, Brent futures for November delivery fell $1.60, or 3.8%, to $40.83 a barrel, while the more active Brent contract for December fell 3.6% to $41.33.

West Texas Intermediate crude fell $1.31, or 3.2%, to settle at $39.29 per barrel.

More than a million people worldwide have died from COVID-19, according to a Reuters tally, a bleak milestone in a pandemic that has devastated the global economy and demand for fuel.

New York City will impose fines on people who refuse to wear a face covering as the rate of positive coronavirus tests climbed above 3% for the first time in months, Mayor Bill de Blasio said on Tuesday.

“The evolving COVID landscape is a massive downside risk for crude prices,” said Craig Erlam, senior analyst at OANDA.

The heads of the world’s largest trading houses predicted tepid oil demand recovery and flat prices in the coming months and possibly even years.

Clashes between Armenia and Azerbaijan over the Nagorno-Karabakh region have also kept markets on edge. If the conflict escalates, it could affect oil and gas exports from Azerbaijan.

In Libya, meanwhile, the Sarir oilfield has restarted production, the head of the company that operates it said on Tuesday, after eastern forces lifted an eight-month blockade on energy facilities.

European Markets Closing Report: European markets close lower with Brexit and U.S. politics on the agenda

 

Elliot Smith


LONDON — European markets retreated Tuesday, pulling back from Monday's rally with Brexit talks and the first U.S. presidential debate on investors' radar.

The pan-European Stoxx 600 closed down by 0.5%. Banks shed 2.1% while utilities bucked the broad downward trend to add 0.5%.

The cautious session follows mixed trading in Asia-Pacific overnight, where mainland Chinese and South Korean shares advanced while stocks in Hong Kong and Australia retreated slightly.

Stateside, stocks fell slightly on Tuesday as the market took a breather following a sharp rally in the previous session. Investors are preparing for the first presidential debate between President Donald Trump and Democratic challenger Joe Biden, with a clear victory for either party likely to cause some market movement.

Markets were still cognizant of the continuing spread of the coronavirus worldwide, with the global death toll now exceeding 1 million with more than 33 million confirmed cases, according to data compiled by Johns Hopkins University.

Investors also had an eye on progress toward a fresh fiscal stimulus package in the U.S., with House Speaker Nancy Pelosi announcing on Monday night that the Democrats were unveiling a new $2.2 trillion stimulus package, smaller than initially proposed but still well above what Republican leaders have offered.

Back in Europe, the U.K. and the European Union have indicated that a Brexit deal is still some way off after negotiations recommenced Monday over implementing their Withdrawal Agreement, which British Prime Minister Boris Johnson's government has sought to renege on.

In corporate news, the bitter fallout from LVMH's soured $16 billion acquisition of Tiffany continues, with the Louis Vuitton owner countersuing the U.S. jeweler on Monday and arguing that Tiffany's financial management during the coronavirus crisis nullifies the purchase agreement.

On the data front, final euro zone economic sentiment rose to 91.1 in September from 87.5 in August, European Commission figures showed Tuesday, while sentiment in the U.K. rose to 83.0 from 75.1.

In terms of individual share price action, British plumbing and heating distributor Ferguson climbed 6.4% after restoring its dividend as cost cuts helped the company boost full-year profits.

Market Insider | Biggest Moves Premarket: Stocks making the biggest moves in the premarket: McCormick, Walmart, Amazon, Big Lots & more

 

Peter Schacknow


Take a look at some of the biggest movers in the premarket:

IHS Markit (INFO) – The financial information and analytics provider earned 77 cents per share for its latest quarter, 8 cents a share above estimates. Revenue was in line with forecasts. The company said it is seeing recovery at “varying speeds” in the markets it serves.

McCormick (MKC) – The spice maker came in one cent a share ahead of estimates, with quarterly earnings of $1.53 per share. Revenue also came in above Wall Street projections. McCormick saw strong growth in its consumer segment, although that was offset by lower demand in its restaurant and foodservice business. The company is projecting fiscal 2020 adjusted earnings per share of $5.64-$5.72, compared to a consensus estimate of $5.76. McCormick also announced a 2-for-1 stock split.

Walmart (WMT) – Walmart is in advanced talks to invest up to $25 billion in India-based conglomerate Tata Group’s “super app,” according to a report in the Mint newspaper. The app is set to launch in December or January, and would offer a wide range of products sold by Tata’s consumer business.

Amazon.com (AMZN) – Amazon launched a $4.99 per month personal shopping service for men, an expansion of its existing Prime Wardrobe service. The new service could put pressure on rival styling service Stitch Fix (SFIX).

Extended Stay America (STAY), Park Hotels (PK), Pebblebrook (PEB), Sunstone (SHO) – Bank of America Securities upgraded the hotel operators to “buy” from “neutral,” with the firm saying it was positioning for a possible Covid-19 vaccine and potential travel recovery. BofA acknowledges that demand in certain segments remains “extremely challenged.”

Big Lots (BIG) – The discount retailer said it expects to report current-quarter earnings of 50 cents to 70 cents per share, compared to a consensus estimate of 21 cents a share as demand for home goods remains strong. The company’s fiscal third-quarter ends Oct. 31.

Microsoft (MSFT) – Microsoft’s Office 365 and Azure cloud services suffered a disruption of several hours on Monday, impacting users of such services as Outlook email and the Teams office collaboration suite.

Universal Health Services (UHS) – Universal Health Services took its computer systems offline after the hospital operator was victimized by a malware attack. Universal Health said the outage did not cause any patient harm and that no patient or employee data appears to have been accessed.

Alphabet (GOOGL) – Alphabet’s Google unit will require app developers that distribute apps through the Google Play store to use its in-app payment system, which takes a 30% fee. Google did not specify apps that had been skirting the rule, but Netflix (NFLX) and Spotify (SPOT) are among those who prompt Android users to pay them directly using a credit card.

Polaris Industries (PII) – The recreational vehicle maker signed a 10-year deal with Zero Motorcycles to develop and sell electric off-road vehicles and motorcycles. The partnership’s first vehicle is expected to debut by the end of 2021.

United Natural Foods (UNFI) – United Natural Foods reported quarterly earnings of $1.06 per share, beating the 74 cents a share consensus estimate. Revenue also exceeded forecasts. The largest U.S. publicly traded food wholesaler also gave a better-than-expected fiscal 2021 earnings outlook. Separately, the company announced that CEO Steven Skinner plans to retire next July 31 when his contract expires, or sooner if a successor is named.

Tiffany (TIF) – Tiffany was countersued by France’s LVMH, with the luxury goods maker accused of financial mismanagement during the Covid-19 pandemic. LVMH announced plans to walk away from its planned takeover of Tiffany earlier this month, and argued in court that the alleged mismanagement allows it to do so.