Thursday October 29th

29-10-2020

Dow futures cut losses after better-than-expected GDP, jobs data

U.S. stock index futures pared losses and turned positive on Thursday after economic data came in better than expected. Dow futures last traded near the flat line after falling more than 100 points earlier. The S&P 500 futures gained 0.3%. Nasdaq 100 futures rose 0.7%. U.S. gross domestic product for the third quarter expanded at a 33.1% annualized pace, its fastest growth ever. The reading came after a 31.4% plunge in the second quarter and was better than the 32% estimate from economists surveyed by Dow Jones. Meanwhile, the number of first-time unemployment-benefits filers declined for a second straight week and hit its lowest level since March. Initial weekly U.S. jobless claims came in at 751,000 for the week ending Oct. 24, better than a Dow Jones estimate of 778,000. Still, the 30-stock Dow is down more than 6% this week and the S&P 500 is off by more than 5%, on pace for their worst weeks since March. Apple, Amazon, Alphabet and Facebook, which all report earnings on Thursday, were higher in premarket trading. “I recognize the carnage, but I do think the carnage is reversible,” said CNBC’s Jim Cramer after Wednesday’s steep declines. The move in futures comes after a sharp sell-off during Wednesday’s session that extended Wall Street’s losing streak. The Dow lost 934 points, or 3.4%, for its fourth-straight negative day and worst loss since June 11. The S&P 500 also saw its worst day since June 11, falling 3.5% for its third-straight negative session. The tech-heavy Nasdaq Composite suffered a slightly larger loss at 3.7% after advancing modestly in the prior session, marking its worst performance since Sept. 8. The sell-off mirrored a rough day for European markets, as rising Covid cases on that continent spurred leaders of Germany and France to announce new economic restrictions for the next month. New cases have also been rising domestically, with former Food and Drug Administration chief, Dr. Scott Gottlieb, telling CNBC that the U.S. was on a path that is three or four weeks behind Europe. Mark Luschini, the chief investment officer at Janney Capital Management, said that he thought the pullback would prove to be a buying opportunity because some of the stocks that would benefit from an economic recovery — such as financials, materials and small caps — suffered smaller losses than the broader market. “That’s not indicative of investors indicting growth here domestically or on a global basis,” he said. Still, Luschini said that one key level he was watching on the S&P 500 was the 200-day moving average at about 3,130, roughly 4.3% below where the index closed on Wednesday. Testing that level “would help to define this as being a natural pullback that was likely to occur, whether it was catalyzed by the election or coronavirus or Sino-American trade negotiations or whatever, and would only be in my mind nothing more than a healthy pullback in the context of a secular rally, or if it’s something that takes more of a nefarious characteristic,” Luschini said. The market decline also came as investors prepare for a massive day of corporate earnings on Thursday. The afternoon will bring quarterly results from many of the world’s largest tech companies, including Amazon, Apple, Facebook and Google-parent Alphabet. Combined, those companies have a market cap of more than $5 trillion. Bob Doll, chief equity strategist at Nuveen, said on “Closing Bell” that the failure for a stronger-than-expected first half of earnings season to boost the broader market was a cause for concern. “Another thing that bothers me is a lot of companies are coming out with much less-worse earnings than expected, the stocks initially go up and then they fade. Too many stocks falling on good earnings results. The market’s just tired and needs a rest,” Doll said. Shares of Facebook and Twitter, which also reports results on Thursday afternoon, moved higher in premarket trading after fellow social media stock Pinterest reported strong growth in revenue and monthly active users. Shares of Pinterest rocketed 30% higher in premarket trading. Shares in Asia-Pacific fell in on Thursday following an overnight plunge on Wall Street as coronavirus cases continue to surge in the West. The sustained increase in coronavirus cases seen in the U.S. as well as across Europe likely weighed on investor sentiment in Asia-Pacific on Thursday. South Korea’s Kospi fell 0.79% on the day to 2,326.67. Shares of industry heavyweight Samsung Electronics declined 1.53% after the firm on Thursday predicted a fourth-quarter decline in profits. In Hong Kong, the Hang Seng index fell 0.49% to finish its trading day at 24,586.60. Mainland Chinese stocks bucked the overall trend regionally as they rose on the day, with the Shanghai composite 0.11% higher to around 3,272.73 while the Shenzhen component rose 0.983% to about 13,519.66. Over in Japan, the Nikkei 225 declined 0.37% to close at 23,331.94 while the Topix index shed 0.1% to end its trading day at 1,610.93. Shares of Sony, however, surged 6.69% after the firm raised its annual profit outlook. Oil prices fell nearly 4% on Thursday to their lowest since mid-June, extending the previous day’s sharp decline on the potential impact renewed coronavirus lockdowns will have on oil demand. December Brent crude futures were down $1.40, or 3.58%, at $37.71. The more active January contract lost $1.48 a barrel to $38.16. U.S. West Texas Intermediate (WTI) crude futures fell $1.38, or 3.69%, to $36.01. Both contracts plunged by more than 5% on Wednesday. Gold edged up on Thursday after a plunge in the previous session as surging global coronavirus cases and fears of a contested U.S. presidential election spurred demand, although a strong dollar capped gains. Spot gold rose 0.2% to $1,881.16 per ounce by 0413 GMT, after falling as much as 2% on Wednesday to a one-month low. U.S. gold futures were up 0.2% at $1,882.