Wednesday December 2nd

2-12-2020

Dow futures dip more than 100 points after strong start to December

U.S. stock index futures edged lower early Wednesday, despite recent strength that has brought the major averages to record highs. Dow Jones Industrial Average futures fell 139 points, implying a loss about 135 points at the open. S&P 500 futures and Nasdaq 100 futures both traded 0.3% lower. Dow component Salesforce announced it is acquiring messaging platform Slack for $27.7 billion after the bell on Tuesday. The Slack deal marks the cloud software vendor’s largest deal ever. Shares of Salesforce were off 5% in the premarket. Investors digested more positive Covid-19 vaccine news. The U.K. on Wednesday authorized the Pfizer-BioNTech vaccine for emergency use, marking another step in the global battle against the pandemic. The major averages popped on Tuesday, the first day of December, adding to their sharp gains from the previous month. The Dow climbed 185 points, helped by a 3% jump in Apple’s stock. The 30-stock average hit an intraday record in Tuesday’s session. The S&P 500 climbed 1.13% to close at a record high. The Nasdaq Composite also notched a new record, closing up 1.3%, as the mega-cap tech stocks all closed in the green. “The beginning of Covid-19 vaccinations is getting close, bringing ‘buy on any dip’ to the forefront,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “After a weaker Monday session, Tuesday brought investors looking for an opportunity to increase risk-on exposures. Activity was further boosted today by bond yields rising in concert with a stronger stock market adding to optimism that recent economic momentum may remain healthy despite the winter Covid-19 case surge.” Sentiment got a boost after a group of lawmakers unveiled a $908 billion stimulus plan. However, Senate Majority Leader Mitch McConnell rejected the proposal later in the day. Still, investors are hopeful for a second stimulus package in the lame-duck period for Congress. Stocks are coming off of their best month in more than three decades. The Dow gained more than 11% in November, notching its best one-month performance since January 1987. The S&P 500 and Nasdaq Composite rose 10.8% and 11.8%, respectively, for their strongest monthly advances since April. November’s rally was bolstered by positive vaccine news from several pharmaceutical companies. The developments pushed investors into stocks that hinge on a strong economic recovery. Despite the positive vaccine data, Federal Reserve Chairman Jerome Powell called the economic outlook “extraordinarily uncertain” on Tuesday when he and Treasury Secretary Steven Mnuchin spoke before Congress this week as part of mandated updates on CARES Act funding. Mnuchin did call on Congress for $300 billion in aid for restaurants heading into the winter months. On the data front, private payrolls rose by 307,000 in November, according to ADP. Economists polled by Dow Jones are expecting 475,000 private jobs were added in November, compared to the 365,000 added in October. The number was also the lowest since July. ADP’s report comes days ahead of the Labor Department’s monthly jobs report. Stocks in Asia-Pacific were mixed on Wednesday after major indexes on Wall Street surged to record highs overnight. Hong Kong’s Hang Seng index closed 0.13% lower at 26,532.58. Mainland Chinese stocks were mixed on the day: The Shanghai composite declined fractionally to about 3,449.38 while the Shenzhen component gained 0.224% to approximately 13,961.58. Elsewhere, South Korea’s Kospi gained 1.58% to close at 2,675.90. In Japan, the Nikkei 225 finished its trading day slightly higher at 26,800.98 while the Topix index advanced 0.32% to close at 1,773.97. Oil prices extended losses on Wednesday, hit by a surprise build in oil inventories in the United States and as OPEC and its allies left markets in limbo by delaying a formal meeting to decide whether to increase output in January. Brent crude oil futures were down by 14 cents, or 0.3%, at $47.27 a barrel, while West Texas Intermediate crude was down by 17 cents, or 0.38%, at $44.38. Gold rose to over a one-week high on Wednesday supported by a soft dollar, while signs of progress in discussions over a new U.S. coronavirus relief package bolstered bullion’s appeal as a hedge against possible inflation. Top Senate Republican Mitch McConnell urged the U.S. Congress to pass a $1.4 trillion spending bill including coronavirus stimulus, while some senators and House members proposed relief measures worth $908 billion. Spot gold rose 0.6% to $1,825.41 per ounce by 1200 GMT, having earlier hit $1,832.20, its highest since Nov. 24. U.S. gold futures gained 0.6% to $1,829.30.