Sep 30, 2020

Wall Street Closing Report: Dow rebounds more than 300 points on stimulus hope to end first losing month since March

 

Yun Li, Fred Imbert


U.S. stocks climbed in volatile trading on Wednesday amid rising hopes for further coronavirus stimulus, paring steep losses for September.

The Dow Jones Industrial Average last traded up 390 points, or 1.4%, after jumping 550 points at its session high. The S&P 500 gained 1.0%, while the tech-heavy Nasdaq Composite climbed 0.9%.

Stocks cut gains after House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin failed to strike a coronavirus aid deal during a more than 90-minute meeting Wednesday. The pair will continue discussions as they try to craft an elusive fifth relief package that could pass both chambers of Congress. The market soared earlier in the session after Mnuchin said lawmakers were giving the bill “a serious try.”

Sentiment was helped by better-than-expected economic data. ADP’s monthly private-sector jobs count showed growth of 749,000 in September, ahead of the 600,000 expected from a Dow Jones economist survey. Meanwhile, pending home sales soared 8.8% in August, marking its highest pace on record, according to the National Association of Realtors survey.

Stocks sensitive to the economic recovery, including banks and cruise operators, were among the biggest winners on Wednesday. JPMorgan, Goldman Sachs and Citigroup all gained at least 1%. Norwegian Cruise popped more than 3%. 

Major averages are headed for their first monthly declines since March. The S&P 500 is down more than 3% this month, on pace for its first down month in six. The Dow and the Nasdaq Composite have fallen 2.3% and 4.7%, respectively, in September.

Vicious first debate

Investors digested the first debate between President Donald Trump and Democratic nominee Joe Biden Tuesday evening, which turned out to be particularly vicious with constant interruptions and insults. Wall Street remained concerned that it will be a drawn-out electoral process that could hit the market. 

“It was a long night and there’s a lot that needs to be sorted out,” said Daniel Deming, managing director at KKM Financial. “It became pretty apparent that this thing is not going to be over on Nov. 3 and I think the market is probably not too crazy about that.”

“The short-term volatility pressures probably won’t abate anytime soon after this debate. In a sense, it’s creating even more uncertainty,” Deming said. 

Trump and Biden sparred on a number of issues, including their qualifications to manage the U.S. economy, the nomination of Amy Coney Barrett to the Supreme Court, as well as the U.S.′ handling of the coronavirus pandemic.

Many market strategists have cited uncertainty around the election as a key headwind for the market before year-end with each outcome bringing its own risks and benefits. Some investors have raised concerns about a potential Biden win as they fear it could lead to higher corporate taxes and tighter regulations. But at the same time, it could ease concerns about the trade war and lack of stimulus to bolster the economy in the wake of the coronavirus.

Investors are also worried about the potential that the Nov. 3 result is too close to call and neither candidate concedes. That uncertainty could particularly weigh on the market.

Trump frequently claims that mail-in balloting leads to voter fraud even though experts have repeatedly said there’s no proof of that ever having been a problem in the United States. Last week the director of the FBI told a Senate committee that there’s no evidence of widespread voter fraud in the United States “whether it’s by mail or otherwise.”

Regardless, on Tuesday night Trump said, “As far as the ballots are concerned, it’s a disaster. This is going to be a fraud like you’ve never seen.”

“Questions on election fraud were raised, which will add to concerns about a volatile post-election period if there is a close or uncertain electoral outcome,” wrote Ed Mills of Raymond James in a note entitled “Dumpster Fire Debate.”

Virus treatment hopes

Positive data regarding a potential coronavirus treatment from Regeneron Pharmaceuticals helped boost sentiment on Wall Street.

Regeneron said after the close Tuesday its REGN-COV2 drug reduced viral levels and improved symptoms in non-hospitalized coronavirus patients.

Meanwhile, Moderna’s experimental Covid-19 vaccine appears safe and shows signs of working in older adults, according to study results published in the New England Journal of Medicine. However, Financial Times reported Wednesday Moderna’s vaccine won’t be ready before the November election.

The major averages snapped a three-day winning streak on Tuesday, with the Dow falling more than 100 points, or 0.5%. Those losses came amid concerns over a virus resurgence. 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.

“Coronavirus infection rates are rising in Europe and the United States as children return to school,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, wrote in a note. “We expect the United States to continue its modest pace of economic improvement, though virus growth and a softer labor market are threats.”

Disney shares lost more than 1% after the company said it would lay off 28,000 people in its theme parks division.

Currencies | The Dollar: Dollar slides as risk sentiment rises on U.S. stimulus hopes

 

4 minutes


U.S. dollar banknotes.

U.S. dollar banknotes.

Liu Jie | Xinhua via Getty

The dollar fell against most currencies in choppy trading, as risk sentiment improved after U.S. government officials expressed hope that another stimulus package could be passed to help ease the economic impact of the coronavirus-induced recession.

The greenback slid against the yen and weakened versus currencies associated with higher risk appetite such as the Australian, New Zealand, and Canadian dollars.

U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin both expressed hope for a breakthrough on additional COVID-19 relief on Wednesday, as they prepared to resume talks aimed at hammering out a bipartisan deal.

“Renewed hopes for stimulus have whetted appetite for risk at the dollar’s expense,” said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington. “It’s encouraging to hear the rhetoric, but until it is signed, sealed, and delivered, the market will be skeptical,” he added.

The dollar index was last trading little changed on the day at 93.90. The index hit a two-month high last Friday.

Tuesday’s highly contentious debate between U.S. President Donald Trump and Democratic challenger Joe Biden boosted the dollar earlier, as it reinforced concerns that the outcome of the Nov. 3 presidential election could be contested.

Trump and Biden battled fiercely over the Republican incumbent’s record on the coronavirus pandemic, health care and the economy in a chaotic and ill-tempered first debate marked by personal insults and Trump’s repeated interruptions.

“The debate just confirmed that the election would be pretty much contested if it’s anywhere close,” said Edward Moya, senior market analyst at OANDA in New York. The greenback was also boosted by quarter-end and month-end portfolio rebalancing, analysts said.

Demand for dollars tends to rise at the end of quarters as portfolio rebalancing and fund transfers require currencies like the euro and sterling to be converted to dollars.

U.S. economic data was also for the most part dollar-supportive. U.S. private employers stepped up hiring in September, with private payrolls increasing by 749,000 jobs this month, the ADP National Employment Report showed on Wednesday. Data for August was revised up to show 481,000 jobs added instead of the 428,000 initially reported.

Andrew Hunter, senior U.S. economist at Capital Economics, however, said despite job gains, employment was still more than 10 million jobs below its pre-pandemic level. “A full labor market recovery remains a long way off,” he noted.

Data also showed that U.S. gross domestic product plunged at a 31.4% annualized rate in the second quarter, the deepest drop in output since the government started keeping records in 1947, based on the Commerce Department’s third estimate of GDP.

The euro was down 0.2% against the dollar at $1.1716. Overall, the dollar was set for its worst quarter since the spring of 2017, with a fall of about 3.3% as hopes for a swift recovery from the COVID-19 economic crash made investors exit safe havens and buy into riskier currencies.

The dollar fell 0.1% against the yen to 105.55.

The Australian dollar rose 0.6% against the greenback to US$0.7166. The New Zealand dollar gained 0.5% to US$0.6621. Against the Canadian dollar, the U.S. dollar fell 0.5% C$1.3319 .

Energy | Oil Price Report: Oil jumps more than 2% on optimistic inventory data

 

3-4 minutes - Source: CNBC


The silhouette of an oil pump is seen at sunset.

The silhouette of an oil pump is seen at sunset.

Pramote Polyamate | Getty Images

Oil prices erased losses and closed higher on Wednesday following optimistic inventory data. However, worries over rising coronavirus cases heading into the northern winter would lead to further restrictions on activity and curb demand for fuel capped gains.

The U.S. Energy Information Administration said Wednesday that inventory for the week ending Sept. 25 declined by 2 million barrels. According to estimates from FactSet, analysts had expected a 400,000 barrel build. 

West Texas Intermediate settled 93 cents, or 2.37%, higher at $40.22 per barrel. Brent crude fell 8 cents to $40.95 per barrel.

The benchmarks fell more than 3% on Tuesday as global Covid-19 cases passed 1 million, having doubled in three months.

“The resurgence in Covid-19 cases more recently in some regions, is clearly not great for market sentiment,” ING Economics said in a note.

“Whilst demand is an issue for the market, the supply side of the equation is not helping either,” ING said.

Libya’s Sarir oilfield, which was producing more than 300,000 barrels per day last year, restarted output after eastern forces lifted an eight-month blockade on energy facilities.

CEOs of the world’s biggest trading companies are forecasting a weak recovery for oil demand and little movement in prices in the coming months and potentially years.

Weighing heavily on markets is the continued depressed demand for jet fuel, with air travel in the doldrums due to coronavirus restrictions and a general disinclination to travel.

Refineries have been trying to find ways to blend their product but an oversupply remains and some plants will be forced to shut down.

Marathon Petroleum Corp, the largest oil refiner in the United States, started imposing job cuts on Tuesday, according to people familiar with the matter.

To counter the fall in demand, the Organization of the Petroleum Exporting Countries is unlikely to increase oil production as planned from January next year, traders said on Tuesday.

The market looked past data from the American Petroleum Institute on Tuesday showing U.S. crude oil stocks fell against expectations, focusing instead on the rise in gasoline inventories.

Also keeping traders and investors on tenterhooks is the November presidential election, which may remain undetermined on election night, with both candidates contesting the results.

President Donald Trump and Democratic contender Joe Biden ended a chaotic first debate late on Wednesday. Biden, 77, has held a consistent lead over Trump, 74, in national opinion polls, although surveys in the battleground states that will decide the election show a closer contest.

Commodities | Gold Price Report: Gold set for worst month in nearly 4 years on dollar bounce-back

 

2-3 minutes - Source: CNBC


Gold

A worker tends to gold bars at a precious metals plant.

Andrew Rudakov | Bloomberg | Getty Images

Gold edged down on Wednesday, as a chaotic first U.S. presidential debate drove investors to the safety of the dollar and raised concerns over the next stimulus bill, leading the metal towards its worst month in nearly four years.

Spot gold was 0.3% lower at $1,892.33 per ounce and down about 4% in September, on track for its worst monthly performance since Nov. 2016.

U.S. gold futures settled down 0.4% at $1,895.50.

“It seems like after last night’s debate, a wedge might have formed between the two parties again and a possibility for any kind of stimulus may have diminished,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

The first U.S. presidential debate between President Donald Trump and Democratic rival Joe Biden turned investors cautious and drove them to seek refuge in the dollar, reducing gold’s appeal for other currency holders.

The dollar index was set for its best month since July 2019.

“Whenever the dollar index rallies, we see a deflationary environment and that weighs on not only the prices of gold but also silver and a lot of other commodities,” Streible added.

Despite the recent pullback, most analysts see an upward trajectory for gold in the medium to long term. The metal is on track for its eighth straight quarterly gain.

The good thing for gold is, with more uncertainty, more people want to own gold, and in addition to that, it looks like some of the policies may continue, like the low and negative interest rates across the globe,” Michael Matousek, head trader at U.S. Global Investors said.

Silver fell 3% to $23.55 per ounce and platinum rose 1.3% to $895.99.

Silver was on track for its worst month since September 2011, down about 17% so far this month, while platinum was set for its biggest fall since March, declining over 3%.

Palladium was steady at $2,309.20.

European Markets at Close: European markets close mixed as U.S. president debate weighs on sentiment

Elliot Smith,Holly Ellyatt


European stocks closed slightly higher on Wednesday as investors reacted to the U.S. presidential debate, and gauged the investment landscape amid the coronavirus crisis.

TICKER COMPANY NAME PRICE CHANGE %CHANGE VOLUME
.FTSEFTSE 100FTSE5888.06-9.44-0.16465892970
.GDAXIDAXDAX12824.64-1.18-0.0141375317
.FCHICAC 40 IndexCAC4833.381.310.0361883817

The pan-European Stoxx 600 provisionally marginally in positive territory, having fluctuated since the open, with banks adding over 1%, while industrials slipped 0.5%.

The first U.S. presidential debate between incumbent President Donald Trump and Democratic nominee Joe Biden could be weighing on investor sentiment worldwide, with the two constantly exchanging sharp remarks in a face-to-face challenge. 

Hardly a minute went by in the 90-minute brawl without one of the candidates angrily interrupting the other, whether on the coronavirus pandemic, the Supreme Court, the economy, or anything else, including each other’s families. For highlights from the debate, click here. 

European Central Bank President Christine Lagarde on Wednesday hinted at a tweak to the bank’s inflation target, as it undergoes a policy review while trying to shore up the bloc’s economic recovery.

U.S. stock futures declined early Wednesday morning as traders digested the debate, while it also soured sentiment in Asia-Pacific markets that traded mixed overnight.

Investors also reacted to the release of China’s manufacturing activity data for September which came in at 51.5, above analysts’ expectations and slightly higher than August’s 51.0 figure, according to the country’s National Bureau of Statistics. PMI readings above 50 indicate expansion from the previous month, while those below that figure signal a contraction.

Meanwhile, in coronavirus developments, Regeneron said its REGN-COV2 drug reduced viral levels and improved symptoms in non-hospitalized coronavirus patients.

In terms of individual share price movement, Suez climbed 5.1% by early afternoon trade after Veolia upped its bid for a stake in the French utility company to $4 billion.

At the other end of the European blue-chip index, TP Icap shares plunged more than 15.8% after the British intermediary firm announced that it is in talks to buy trading network Liquidnet.

-CNBC.com staff contributed to this market report.

News | Business | Economy | US: U.S. economy plunges 31.4% in the second quarter but a big rebound is expected

 

3-4 minutes - Source: CNBC


The U.S. economy plunged at a record rate in the spring but is poised to swing to a record increase in the quarter that is just ending.

The Commerce Department reported Wednesday that the gross domestic product, the economy’s total output of goods and services, fell at a rate of 31.4% in the April-June quarter, only slightly changed from the 31.7% drop estimated one month ago.

The new report, the government’s last look at the second quarter, showed a decline that was more than three times larger than the previous record-holder, a fall of 10% in the first quarter of 1958 when Dwight Eisenhower was president.

Economists believe the economy will expand at an annual rate of 30% in the current quarter as businesses have re-opened and millions of people have gone back to work. That would shatter the old record for a quarterly GDP increase, a 16.7% surge in the first quarter of 1950 when Harry Truman was president.

The government will not release its July-September GDP report until Oct. 29, just five days before the presidential election.

While President Donald Trump is counting on an economic rebound to convince voters to give him a second term, economists said any such bounce back this year is a longshot.

Economists are forecasting that growth will slow significantly in the final three months of this year to a rate of around 4% and could actually topple back into a recession if Congress fails to pass another stimulus measure or if there is a resurgence of Covid-19. There are upticks in infections occurring right now in some regions of the country, including New York.

“There are a lot of potential pitfalls out there,” said Gus Faucher, chief economist at PNC Financial Services. “We are still dealing with a number of significant reductions because of the pandemic.”

He said in addition to the possibility that Congress will not pass further stimulus support because of the sharp split between Democrats and Republicans over how much more is needed, there are other threats in the form of uncertainty over the upcoming election.

“All this political uncertainty has the potential to weigh on economic growth,” Faucher said.

The Trump administration says that solid growth in the coming quarters will restore all of the output lost by the pandemic.

So far this year, the economy fell at a 5% rate in the first quarter, signaling an end to a nearly 11-year-long economic expansion, the longest in U.S. history. That drop was followed by the second-quarter decline of 31.4%, which was initially estimated two months ago as a drop of 32.9%, and then revised to 31.7% last month.

The slight upward revision in this report reflected less of a plunge in consumer spending than had been estimated. It was still a record fall at a rate of 33.2%, but last month’s projections were for a decline of 34.1%. This improvement was offset somewhat by downward revisions to exports and to business investment.

Futures Indicator Update: S&P 500 futures cut losses, turn slightly higher on stimulus hopes

 

Fred Imbert,Yun Li


U.S. stock futures erased earlier losses and turned higher on Wednesday amid rising hopes for further fiscal stimulus. The market headed for its first negative month since March.

Disney added to the negative sentiment after saying it would lay off 28,000 people in its theme parks division. The shares lost more than 2% in premarket trading.

Dow Jones Industrial Average futures dipped 50 points, or 0.1%. The move indicated a slight gain of about 30 points at the open. S&P 500 futures fell 0.1%. Nasdaq 100 futures lost about 0.2%.

Futures cut their losses after better-than-expected jobs data. ADP’s monthly private-sector jobs count showed growth of 749,000 in September, ahead of the 600,000 expected from a Dow Jones economist survey.

The S&P 500 is down 4.7% in September, on pace for its first monthly losses since March. The Nasdaq Composite is down 5.9% in September, while the Dow is off by 3.4%.

Traders were hoping that the start of the debate process will lead to a clear winner on Election Day and not a drawn-out electoral process that could hit the market. The vicious first debate did little to ease those concerns.

“It was a long night and there’s a lot that needs to be sorted out,” said Daniel Deming, managing director at KKM Financial. “It became pretty apparent that this thing is not going to be over on Nov. 3 and I think the market is probably not too crazy about that.”

“The short-term volatility pressures probably won’t abate anytime soon after this debate. In a sense, it’s creating even more uncertainty,” Deming said. 

President Donald Trump and Democratic nominee Joe Biden sparred on a number of issues, including their qualifications to manage the U.S. economy, the nomination of Amy Coney Barrett to the Supreme Court as well as the U.S.′ handling of the coronavirus pandemic.

Biden came into the debate with an average lead of 6.1 percentage points in recent polls, according to RealClearPolitics. The former vice president was also the favorite to win the election in betting markets heading into the debate.

“Most people come away from it thinking it was an ugly experience,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “I don’t think it changed peoples’ minds really.”

Many market strategists have cited uncertainty around the election as a key headwind for the market before year-end with each outcome bringing its own risks and benefits. Some investors have raised concerns about a potential Biden win as they fear it could lead to higher corporate taxes and tighter regulations. But at the same time, it could ease concerns about the trade war and lack of stimulus to bolster the economy in the wake of the coronavirus.

Investors are also worried about the potential the Nov. 3 result is too close to call and neither candidate concedes. That uncertainty could particularly weigh on the market.

Trump frequently claims that mail-in balloting leads to voter fraud even though experts have repeatedly said there’s no proof of that ever having been a problem in the United States. Last week the director of the FBI told a Senate committee that there’s no evidence of widespread voter fraud in the United States “whether it’s by mail or otherwise.”

Regardless, on Tuesday night Trump said, “As far as the ballots are concerned, it’s a disaster. This is going to be a fraud like you’ve never seen.”

“I think we’re going to do well because people are really happy with the job we’ve done. But we might not know for months because these ballots are going to be all over” the place,” he added. 

“Questions on election fraud were raised, which will add to concerns about a volatile post-election period if there is a close or uncertain electoral outcome,” wrote Ed Mills of Raymond James in a note entitled “Dumpster Fire Debate.”

Still, positive data regarding a potential coronavirus treatment from Regeneron Pharmaceuticals kept some of the market’s losses in check.  

Regeneron said after the close Tuesday its REGN-COV2 drug reduced viral levels and improved symptoms in non-hospitalized coronavirus patients.

“The greatest treatment benefit was in patients who had not mounted their own effective immune response, suggesting that REGN-COV2 could provide a therapeutic substitute for the naturally-occurring immune response,” Regeneron Chief Scientific Officer George D. Yancopoulos said in a statement.

The major averages snapped a three-day winning streak on Tuesday, with the Dow falling more than 100 points, or 0.5%. Those losses came amid concerns over a virus resurgence. 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.

“Coronavirus infection rates are rising in Europe and the United States as children return to school,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, wrote in a note. “We expect the United States to continue its modest pace of economic improvement, though virus growth and a softer labor market are threats.”

What the debate means for the markets, according to Wall Street political analysts?

 

Thomas Franck


People watch the first presidential debate between U.S. President Donald J. Trump and Former U.S. Vice President Joe Biden, on September 29, 2020, in Hoboken, New Jersey, United States.

People watch the first presidential debate between U.S. President Donald J. Trump and Former U.S. Vice President Joe Biden, on September 29, 2020, in Hoboken, New Jersey, United States.

Tayfun Coskun | Anadolu Agency | Getty Images

(This story is only for CNBC Pro subscribers)

The raucous first presidential debate left many on Wall Street unnerved about President Donald Trump’s unwillingness to accept a loss in November and the prospect of a protracted court battle to settle a close election.

The Tuesday evening debate, the first of three scheduled between Trump and former Vice President Joe Biden, was riddled with interruptions and attacks.

I “disagree with notion that debate was a dumpster fire: by definition, dumpster fires are contained,” Cowen analyst Chris Krueger wrote in a note to clients titled “Crazy Train.”

“Further debates aren’t set in stone. Debate was too chaotic to do anything but reinforce both sides. People are exhausted; that was exhausting,” the analyst continued. “Trump did not lay out any vision or policy plan for a 2nd Term — other than declaring Biden a Trojan Horse for socialism.”

Market Insider | Biggest Moves Premarket: Stocks making the biggest moves in the premarket: Disney, Micron, Dow Inc., GM & more

 

Peter Schacknow


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

Walt Disney (DIS) – Disney is cutting 28,000 jobs in its theme parks division, as the coronavirus impacts park visits and as the company’s flagship Disneyland resort remains closed for the foreseeable future due to restrictions imposed by California.

Palantir (PLTR) – Palantir will begin trading on the New York Stock Exchange today in a direct listing, with the NYSE setting a reference price of $7.25 per share for the data analytics company’s stock. That values Palantir at $15.8 billion ahead of its market debut.

Asana (ASAN) – Asana will also begin trading today on the NYSE, with a reference price of $21 per share for the software company. Palantir and Asana are only the third and fourth companies to go public via direct listing, following Spotify (SPOT) and Slack (WORK).

Micron Technology (MU) – Micron beat estimates by 9 cents a share, with quarterly earnings of $1.08 per share. The chip maker’s revenue also beat forecasts. Micron gave a lower-than-expected current-quarter revenue estimate, however, partly due to the U.S. government ban on shipments to China’s Huawei Technologies.

Dow Inc. (DOW) – The materials science company announced plans to reduce its global workforce costs by 6%, although it did not announce how many jobs might be cut. It will take a current quarter charge of $500 million to $600 million in connection with the restructuring.

General Motors (GM) – GM will not close its deal to buy a stake in electric truck maker Nikola (NKLA) today, according to sources who spoke to CNBC’s Phil LeBeau. Talks between the two sides will continue, however, amid accusations by short-seller Hindenburg Research that Nikola had misled investors about its technology. Nikola has denied those accusations.

Caesars Entertainment (CZR) – The casino operator’s $3.7 billion bid to buy William Hill was accepted by the British betting firm, with William Hill saying it believed the deal was the best option for shareholders at an attractive price.

Canada Goose (GOOS) – The outerwear maker was upgraded to “outperform” from “market perform” at Cowen, which noted the company’s strong brand equity and global strength.

Royal Dutch Shell (RDS.A, RDS.B) – The energy giant said it plans to cut up to 9,000 jobs, after completing a broad cost-cutting review. Those cuts will be completed by the end of 2022, at a projected savings of up to $2.5 billion annually.

Apple (AAPL) – Apple CEO Tim Cook was granted 333,987 restricted stock units, his first stock grant since 2011. Apple’s board said it made the award in recognition of Cook’s “outstanding leadership.”

Moderna (MRNA) – Moderna’s experimental Covid-19 vaccine appears safe and shows signs of working in older adults, according to study results published in the New England Journal of Medicine.

Regeneron Pharmaceuticals (REGN) – The drugmaker said its experimental Covid-19 treatment was effective in treating early-stage illness, improving symptoms and reducing virus levels in patients who were not hospitalized.

Duke Energy (DUK) – Duke was approached by NextEra Energy (NEE) about a takeover recently, according to people familiar with the matter who spoke to The Wall Street Journal The paper said Duke rejected the approach but that NextEra was still interested in pursuing a combination of the two Southern utility companies.

Sherwin-Williams (SHW) – The paint producer boosted its sales and profit outlook, thanks in large part to a boost in painting projects by homebound consumers.

Starbucks (SBUX) – Starbucks was upgraded to “outperform” from “market perform” at Cowen, which notes that the coffee chain has expanded digital access with new pay options and also seen rapid growth in curbside pickup.

Bonds: Treasury yields mixed; debate, coronavirus treatment, stimulus in focus

 

Elliot Smith


U.S. government debt prices were mixed Wednesday morning as investors digested the first presidential debate and positive coronavirus treatment news, with a host of economic data due shortly.

At around 2:10 a.m. ET, the yield on the benchmark 10-year Treasury note was lower at 0.6413% and the yield on the 30-year Treasury bond was higher at 1.4129%. Yields move inversely to prices.

Treasurys

TICKER COMPANY YIELD CHANGE %CHANGE
US3MU.S. 3 Month Treasury0.0960.000.00
US1YU.S. 1 Year Treasury0.114-0.0030.00
US2YU.S. 2 Year Treasury0.1250.000.00
US5YU.S. 5 Year Treasury0.2520.0020.00
US10YU.S. 10 Year Treasury0.6480.0030.00
US30YU.S. 30 Year Treasury1.4210.0150.00

Investors watched the fiery opening debate between the two presidential candidates closely, with markets looking for signs of a clear winner emerging over the course of the election cycle in order to avoid a protracted dispute after ballots are cast on Nov. 3.

President Donald Trump and Democratic nominee Joe Biden sparred on a number of issues over a chaotic and fractious 90 minutes, including their qualifications to manage the U.S. economy, the nomination of Amy Coney Barrett to the Supreme Court and the handling of the coronavirus pandemic.

Market sentiment received a boost Tuesday night after Regeneron Pharmaceuticals announced that its REGN-COV2 drug reduced viral levels and improved symptoms in non-hospitalized coronavirus patients

Meanwhile, House Speaker Nancy Pelosi said she hoped a deal could be reached with the White House on coronavirus aid spending this week, following a meeting with Treasury Secretary Steven Mnuchin. The two plan to meet again for further talks on Wednesday.

Focus Wednesday will also shift to final second-quarter GDP (gross domestic product) growth data, due at 8:30 a.m. ET along with final second-quarter corporate profits and PCE (personal consumption expenditure) price index readings. These will follow ADP employment change figures due at 8:15 a.m. ET.

Auctions will be held Wednesday for $25 billion of 105-day Treasury bills and $30 billion of 154-day bills.

- CNBC’s Fred Imbert contributed to this report.

Analysis | The Cybersecurity 202: Trump made a slew of false claims about mail voting during the first debate

Joseph Marks


with Tonya Riley

President Trump closed the first 2020 presidential debate with a barrage of false claims about mail voting that are sure to give heartburn to officials trying to run an orderly election amid extremely difficult circumstances.

He claimed without evidence that mail voting will produce “fraud like you’ve never seen” and that 30 or 40 percent of mail ballots are traditionally lost in elections. Those claims have all been rebutted by election officials and leaders at Trump’s own FBI and Department of Homeland Security who say mail voting fraud is exceptionally rare and extremely difficult to pull off. 

He also refused to say he’d accept the results of the election or that he won’t preemptively declare victory before all the ballots are counted.

“If I see tens of thousands of ballots being manipulated, I can't go along with that,” he said.

The president’s major theme appeared, astoundingly, to be that there’s absolutely no way to hold a legitimate election at this point.“As far as the ballots are concerned, it's a disaster,” he said. 

When the debate moderator Fox News’s Chris Wallace pressed him about what should be done to protect the integrity of mail voting, which has already begun in many states, he didn’t answer. He did say that he’s “counting on” the U.S. Supreme Court – where the Senate is considering his appointment to replace the late Justice Ruth Bader Ginsburg – to weigh in on mail voting. “I hope we don't need them, in terms of the election itself, but for the ballots, I think so,” he said. “Because what's happening is incredible.” 

Democratic presidential nominee Joe Biden, meanwhile, expressed confidence about the election’s legitimacy.  He charged that Trump’s goal is to depress voter turnout to aid his electoral chances. 

This is all about trying to dissuade people from voting because he's trying to scare people into thinking that it's not going to be legitimate,” he said. 

He urged Americans to “show up and vote. You will determine the outcome of this election. Vote, vote, vote.”

The volume of falsehoods was astounding even considering Trump’s frequent unfounded attacks on mail voting.

He claimed without evidence that mail ballots are being sold on the street by mail carriers and discovered in creeks and rivers.

He falsely claimed that his supporters were blocked from observing polls in Philadelphia, when in fact traditional polls are not open yet.

He cited a genuine case in which nine mail ballots mailed by military members were found discarded by election officials in Luzerne County, Pa. But he claimed without evidence that all the ballots included votes for him and that it was aimed at hurting his candidacy. In fact, seven of the nine ballots included votes for Trump but the other two remain sealed. Federal investigators are still investigating the case and the motives of the contractor who threw out the ballots remain unclear.

Here’s how CNN’s fact checker Daniel Dale summed it up on Twitter: “I'm not exaggerating when I say almost literally everything Donald Trump says about mail voting is wrong in whole or in part.”

Election officials and experts were quick to hit back at Trump’s claims during the debate.

Here’s David Levine, elections integrity fellow at the Alliance for Securing Democracy:

Michael G. Miller, a political science professor at Barnard College:

Graham Brookie, director of the Atlantic Council’s Digital Forensic Research Lab, which focuses on combating disinformation: 

And Edward Perez, global director of technology development at OSET Institute, a nonprofit election technology organization:

Biden responded to Trump’s attacks largely by urging his supporters to vote – and providing extensive details about how to do that. 

The intense focus on the voting process harkened back to the Democratic National Convention when speaker after speaker urged Americans to “make a plan to vote.”

It was essentially an acknowledgement that mail voting is often more complex than in-person voting and will be unfamiliar to many people doing it for the first time during the pandemic. That could lead to legitimate votes that are discarded because of technicalities. 

Election officials in Pennsylvania, for example, are warning that as many as 100,000 mail ballots might be invalidated because voters failed to put their ballot inside a “secrecy envelope” designed to ensure voter privacy. 

During that portion of the debate Biden outlined mail voting procedures, urged patience while mail votes are counted and even described part of the process for voters to challenge when their ballots are invalidated. He also urged people to vote in person if they choose to and expressed confidence that polling sites will allow for sufficient social distancing during the pandemic.

“Vote whatever way is the best way for you,” Biden said. “He cannot stop you from being able to determine the outcome of this election.”

The keys

The Trump administration is looking into Chinese investments in U.S. tech start-ups for national security red flags.

The government committee that monitors foreign investments for national-security risks has sent dozens of inquiries about deals dating years back, Jeanne Whalen reports. 

The letters highlight the way White House national security concerns are escalating the increasingly contentious economic relationship between the United States and China.

The inquiries are the first steps for the Treasury Department-led Committee on Foreign Investment in the United States in deciding whether it will investigate an investment, as it did with TikTok. 

CFIUS is most focused on companies and apps that collect sensitive personal information or are involved with critical technologies like batteries and biotechnology, lawyers familiar with the letters told Jeanne. 

Historically, it was unusual for [CFIUS] to reach back more than three years,  said Stephen Heifetz, a lawyer at Wilson Sonsini. But there is in theory no time limitation, and we are increasingly hearing about long reach-back periods.”

CFIUS has also sent agents to tech and venture capital leaders in Silicon Valley to warn them about Chinese investments, Jeanne reports.

A federal judge sentenced a hacker who stole over 100 million passwords from LinkedIn and other platforms to seven years in prison.

Yevgeniy Nikulin attempted to sell passwords and usernames from the 2012 breaches to other Russian cybercriminals, Jeff Stone at CyberScoop reports

Nikulin was charged in 2016 with nine felony counts, including computer intrusion and aggravated identity theft. He was found guilty in July, but his lawyers have argued that the government unfairly based his sentencing on identity theft losses that were never reported.

Foreign hackers are becoming more sophisticated, Microsoft says.

Ransomware and phishing attacks are growing in popularity among foreign hackers, according to a new annual digital defense report from the company. Attacks on internet-connected devices increased 35 percent and hackers continue to exploit vulnerabilities in virtual private networks to steal passwords, Microsoft found.

Covid-19 response efforts have become a key target. Microsoft observed 16 different nation-state actors using the pandemic to try lure victims or hack into groups involved in response efforts. Attackers have also increased how quickly they demand ransoms for data captured in attacks, believing that the pandemic has made regaining access to the data more critical, Microsoft said.

Hill happenings

The House unanimously passed four bills that would shore up U.S. energy infrastructure against cyberattacks.  

The bills would establish new Energy Department programs to enhance cybersecurity for the U.S. power grid, Maggie Miller at The Hill reports. The quartet of bills also addresses physical threats to the grid, such as wildfires.

More cybersecurity news:

Daybook

  • The Senate Armed Services Committee will hold a hearing on supply chain integrity on Thursday at 9:15 a.m.
  • New Americas Open Technology Institute will hold a virtual panel exploring how Internet platforms are addressing the spread of election-related misinformation on Thursday at 1:30 p.m.

Secure log off

Here's a blast from the SNL debate past:

DealBook: Takeaways From the Shoutfest

13-17 minutes - Source: NYT


Credit...Saul Loeb/Agence France-Presse — Getty Images

‘Highlights’ from the ‘hot mess’

What to make of last night’s chaotic presidential debate? The Times’s Jonathan Martin and Alexander Burns called it an “ugly melee,” CNN’s Jake Tapper dubbed it “a hot mess inside a dumpster fire inside a train wreck” and The Washington Post’s Dan Balz described it as “an insult to the public.” But in between the shouting, the invective and the trampling of the debate moderator — one transcript noted 73 instances of “[crosstalk]” — there was some discussion of issues that matter to business.

The highlights (if you can call them that):

The Affordable Care Act: President Trump disputed Joe Biden’s claim that 100 million people with pre-existing conditions might lose their health care if the law is overturned, before falsely claiming that as president he has promoted a comprehensive replacement for Obamacare. Mr. Trump also accused Mr. Biden of “going to socialist medicine,” which Mr. Biden forcefully denied.

The economy: Mr. Trump took credit for spurring job creation amid the pandemic: “We had 10.4 million people in a four-month period that we’ve put back into the work force.” Mr. Biden criticized the president’s handling of the coronavirus and said Mr. Trump would be “the only president in modern history to leave office with fewer jobs than when he took office.”

Taxes: Mr. Trump disputed The Times’s reporting on his tax returns: “I paid millions of dollars in taxes, millions of dollars of income tax.” Mr. Biden said that the president’s policies had disproportionately helped the wealthy — “Billionaires have made another $300 billion because of his profligate tax proposal” — and that average Americans paid far more in taxes than the $750 that Mr. Trump paid in both 2016 and 2017.

The main takeaway is that the debate didn’t alter the race. UBS’s Paul Donovan wrote in a note to clients today that, if anything, “the debate may have increased expectations for a contested election result,” particularly as Mr. Trump again suggested that he would challenge an unfavorable outcome. Political betting markets also showed little change, maintaining odds implying Mr. Biden is still the favorite to (eventually) win.

____________________________

Today’s DealBook Briefing was written by Andrew Ross Sorkin and Lauren Hirsch in New York, Ephrat Livni in Washington, and Michael J. de la Merced and Jason Karaian in London.

____________________________

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Credit...David Mcnew/Agence France-Presse — Getty Images

Disney is laying off 28,000 employees. The job cuts account for around a quarter of workers at its theme parks in California and Florida, who had been on furlough. Disneyland in California remains closed, while customers have been reluctant to return to Disney World in Florida, which reopened on a limited basis in July.

Internal documents point to a “mounting injury crisis” at Amazon. Records obtained by The Reveal purport to show a growing number of workers being hurt at the company’s warehouses from 2016 to 2019. The injuries are “especially acute” during peak periods like Prime Day, according to the report. Separately, Target and Walmart announced their own mid-October sales events that coincide with Prime Day.

JPMorgan Chase will pay $920 million to settle “spoofing” trading accusations. The bank admitted wrongdoing by 15 of its traders who sought to manipulate markets for precious metals and Treasury securities. The Justice Department said the scheme cost other traders more than $300 million in losses.

New York City elementary schools reopened for in-person teaching. About 300,000 schoolchildren returned yesterday, the most of any U.S. school district. The move was hailed as a way to help get parents back to work, but hours after reopening Mayor Bill de Blasio warned that the city’s daily rate of positive Covid-19 tests had climbed above 3 percent, potentially leading to another shutdown.

The N.F.L. suffered its first Covid-19 team outbreak. At least nine members of the Tennessee Titans organization, including three players, tested positive for the coronavirus. Experts said that this was inevitable, given the lack of a “bubble” system and the full-contact nature of football. The Titans have put off practice until the extent of the outbreak is known, potentially upending this weekend’s game schedule (and giving gamblers something new to factor into their wagers).

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Credit...Arnd Wiegmann/Reuters

Palantir and Asana will both begin trading today on the New York Stock Exchange via direct listings, in which no money is raised via selling shares in advance. The deals are only the third and fourth high-profile direct listings in years, following Spotify and Slack. Given the rarity of such deals and the size of the companies going to market, the listings will likely serve as a barometer for whether more could follow suit.

The details: Asana, expected to settle at a valuation of about $5 billion, is a workplace software company started by the Facebook co-founder Dustin Moskovitz. Palantir, which could be valued at more than $20 billion, is a software company used by government agencies. It was co-founded by Peter Thiel, who remains the largest individual shareholder and will wield inordinate control over the company once it goes public.

How to measure success: The initial success of any public offering is judged partly on where it prices. Does it earn a valuation higher in the public market than it did from private investors? Does it trade up (but not too far up) after listing? Pricing in direct listings is trickier than in the traditional I.P.O. process, because there is no book-building process in which bankers negotiate and allot shares to institutional investors beforehand. As such, the process is largely in the hands of market makers (Citadel, for both Asana and Palantir).

The listings could steal glory from other ways of going public. Companies going public increasingly consider a three-track process, weighing traditional I.P.O.s, direct listings and SPACs. SPACs are dilutive but also offer fresh cash, whereas direct listings do not (though that may soon change). Traditional I.P.O.s also raise cash, and may be a better fit for companies that lack brand recognition and need help telling their story to investors but are criticized for steep fees and a tendency to underprice shares to produce a first-day “pop.” A smooth, well-received performance for Asana and Palantir today may help tip the scale in direct listings’ direction.

The powerful business lobbying group’s top political strategist, Scott Reed, resigned over what he called a drift to the political left. The chamber disputes his account.

Mr. Reed said he had left because of a string of endorsements of Democrats and what he characterized as a lack of commitment to defend Republicans’ majority in the Senate. Mr. Reed is a longtime Republican operative who managed Bob Dole’s 1996 presidential campaign and was credited with helping oust Representative Steve King of Iowa over his hard-line views on immigration.

The chamber said he had been fired for improper conduct, including breaching confidentiality and leaking to news outlets. The group noted that it has endorsed 192 House Republicans, versus 30 Democrats, and it supports President Trump’s nomination of Judge Amy Coney Barrett to the Supreme Court.

The dispute highlights the minefield of political endorsements. Bruce Mehlman, a partner at the bipartisan Washington lobbying group Mehlman Castagnetti, told DealBook that his corporate clients increasingly faced questions about which candidates and issues to endorse, and it’s “definitely accelerating.” The hyperpartisan atmosphere affects perceptions of brand values and company culture, which can be fraught for executives trying to balance competing views.

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Credit...Charlie Riedel/Associated Press

By the end of today, U.S. lawmakers must decide whether to extend a $25 billion grant program offered to airlines to keep employees on the payroll. And airlines must decide whether they want to tap a $25 billion loan program to cover general costs.

Seven carriers have said they will take up the loans before the deadline — including American and United, but not Delta or Southwest. All have pushed for an extension of payroll grants, and warned of tens of thousands layoffs without an agreement.

Three ways this might play out:

1) Congress strikes a deal. House Democrats rolled out a $2.2 trillion stimulus bill on Monday that included aid to airline workers. Speaker Nancy Pelosi said she was hopeful about a deal with Republicans after a 50-minute call with Treasury Secretary Steven Mnuchin on Tuesday. The two plan to resume talks today. Even an agreement in principle may be enough to stave off airline layoffs, as the companies expect a bill to make its way to the president’s desk before too long.

• If talks over a comprehensive coronavirus relief package falter, lawmakers could also pass a stand-alone bill for airlines. Yet executives would prefer not to be placed in the spotlight: The industry, which has binged on buybacks, is facing heat for receiving aid while others, like retail and hospitality, suffer under the pressure of the pandemic.

2) President Trump acts on his own. The administration has spoken on and off about offering aid to airlines through an executive order. From a political standpoint, it could be framed as a job-saving “win” for Mr. Trump, but the logistics of such a maneuver remain unclear. “We think the better plan is to get legislation passed,” Doug Parker, American Airlines’ C.E.O., recently said.

3) The aid expires with no sign of more money. This is when airlines’ dire warnings will be revealed as either negotiating tactics or founded in reality. Some, like United and Delta, have mitigated layoffs through voluntary buyouts. Others, like American, haven’t been able to strike such deals. Industry experts say that without more aid, the biggest airlines are likely to survive for at least the short term. Regional airlines, though, may face bankruptcy and even liquidation. And troubles for carriers would be likely to ripple broadly, hitting suppliers, service providers and more.

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Credit...Samuel Corum/Agence France-Presse — Getty Images

More than 8,100 blazes have burned nearly four million acres across California this year. The Glass Fire that broke out this week near Napa, which is only 2 percent contained, is ravaging parts of the famous winemaking region in the middle of the harvest season, and the effects may linger long after the fires are extinguished.

Grapes untouched by flames can be tarnished by ash or smoke taint, and the extent of the damage is revealed only in the fermentation process. Since red wines are fermented along with their skins, which bear the brunt of smoke taint, they are more affected than whites. How bad is the taint? There is a testing backlog, Gladys Horiuchi of the lobbying group Wine Institute told DealBook, so the economic effects aren’t yet known.

Most California wine grapes are sold in advance, leaving only 20 percent on the market for harvest bidding. Vineyards and wineries are working together to mitigate the impact of the fires, Ms. Horiuchi said, and the goal is to avoid any smoke-tainted wine ever going on sale. That means drinkers may not notice any difference while, behind the scenes, supply chains and longstanding industry relationships come under severe pressure.

• Reports suggest that some wineries are offering growers reduced payments to keep them in business but avoid potentially tainted grapes, while major buyers like Constellation warn that contracts could be voided for elevated taint. Others are turning to the bulk market, which is usually quiet over the harvest, to cover the shortfall.

Assessing the immediate damage: The San Francisco Chronicle is keeping a running list of wineries and vineyards in Napa that have been hit by the Glass Fire, with extensive damage reported at Castello di Amorosa (although its famous castle survived), Chateau Boswell and LVMH-owned Newton Vineyard, among others.

Deals

• What pandemic? Blockbuster deals made for the busiest summer for M.&A. activity in three decades. (FT)

• NTT’s $40 billion deal for its wireless affiliate has revived speculation about another take-private possibility in Japan: SoftBank. (Bloomberg)

SPAC corner

• Joanna Coles, the former editor of Hearst magazines, is leading a blank-check company that seeks to raise $300 million for acquisitions. (Reuters)

• A blank-check company focused on green-energy targets, led by a former C.E.O. of NRG Energy, raised $200 million from investors. (BusinessWire)

Politics and policy

• The Treasury Department plans to start forgiving Paycheck Protection Loans soon, after complaints from borrowers. (WSJ)

• The Justice Department’s antitrust chief, Makan Delrahim, said he planned to scrutinize the prices that exchanges charge for trading data. (Bloomberg)

Tech

• Seattle’s City Council approved a minimum pay rate for Uber and Lyft drivers, the second city in the U.S. to do so. (NYT)

• The E.U. is prepared to clear Google’s $2.1 billion takeover of the fitness device maker Fitbit after the tech giant pledged not to use Fitbit user data to target ads for 10 years. (FT)

Best of the rest

• Blackstone plans to cut carbon emissions of companies or assets that it buys by 15 percent within three years of acquiring them. (WSJ)

• Students said that software that watches them take tests “feels like an invasion of privacy.” (NYT)

• Thanks, Obama: The Booker Prize award ceremony was rescheduled to avoid conflicting with the publication of the former president’s new memoir. (NYT)

Thanks for reading! We’ll see you tomorrow.

We’d love your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.

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