U.S. stock benchmarks turned negative midday Friday, with the major indexes on track for weekly declines, as a top White House economist said fiscal relief talks weren’t seeing much traction, sparking investor fears that another round of coronavirus aid may not be forthcoming before Election Day.
What are major benchmarks doing?
The Dow Jones Industrial Average DJIA, -0.50% was off 187 points, or 0.7%, at 28,182, while the S&P 500 SPX, -0.12% fell 11 points, or 0.3%, to trade at around 3,442. The Nasdaq Composite Index COMP, -0.20%, meanwhile, shed 61 points, or 0.5%, to trade at 11,444.
The Dow on Thursday rose 152.84 points, or 0.5%, to close at 28,363.66, while the S&P 500 gained 17.93 points, or 0.5%, to finish at 3,453.49. The Nasdaq Composite ended at 11,506.01, up 21.31 points, or 0.2%. Through Thursday, the S&P 500 and Dow were each down 0.9% for the week, while the Nasdaq was off 1.4%.
What’s driving the market?
Larry Kudlow, director of the White House’s National Economic Council, threw cold water on those hoping for a near-term aid package to materialize from talks between House Democrats, led by Nancy Pelosi, D-Calif., and the Trump administration on a new round of relief spending.
“It would be very difficult, even if you had a deal in the next few days, Kudlow said in an interview with Bloomberg Television on Friday. “The ball’s not moving much right now,” he said.
“You’ve got to go through the committee print, and then you’ve got to have votes in the House and the Senate, so it’s not going to be easy,” he told Bloomberg.
The statement stands in contrast with remarks made by House Speaker Pelosi on Thursday, who said negotiations with Treasury Secretary Steven Mnuchin were “almost there” in terms of resolving some of the thornier areas of disagreement.
The apparent change makes it doubtful that a deal can be struck soon that would pass muster with Senate Republicans, who have balked at spending plans of around $2 trillion. Senate Majority Leader Mitch McConnell, R-Ky., on Thursday also refused to commit to a pre-election vote on an aid package.
“Once again, there has been a lot of talk about the proposed US stimulus package, but at the same time, differences of opinion still exist, according to Larry Kudlow,” wrote David Madden, market analyst at CMC Markets, in a midday Friday note. “It seems that the chances of a deal being struck before the Presidential election are dwindling,” he wrote.
Meanwhile, a second and final head-to-head debate between Democratic challenger Joe Biden and President Donald Trump on Thursday night appeared to have little effect on the markets, with the incumbent also highlighting challenges in getting a fiscal aid bill going.
Biden continues to lead Trump in the polls, but has seen his advantage narrow somewhat in general election polls from RealClearPolitics, but his advantage in polls tracking so-called battleground states, which could ultimately decide the election outcome, has edged up to 5.1 percentage points from 4.9.
“The market’s verdict on the U.S. debate is that it doesn’t alter the outlook significantly and, as such, doesn’t justify a collapse in risk sentiment or anything more serious,” said Kit Juckes, macro strategist at Société Générale, in a note.
Positive news on the COVID-19 treatment front might provide some support though. The Food and Drug Administration on Thursday approved Gilead Sciences Inc.’s GILD, +0.84% Veklury for patients who had been hospitalized with COVID-19. The drug, until now called remdesivir, is the first COVID-19 therapy to receive full FDA approval during the pandemic though the World Health Organization says the drug has a limited effect on patients chances of survival. Gilead shares were up 1.8%.
Meanwhile, shares of Intel Corp. INTC were down nearly 11% after the company late Thursday said revenue sank more than expected in the third quarter as sales of server chips suffered. The decline in the chip maker was weighing on the Dow where it is a component.
In U.S. economic data, the IHS Markit PMI indexes for both the service and manufacturing sides of the economy rose in October, showing the fastest rate of expansion in 20 months, but companies acted cautiously with coronavirus still spreading and the presidential election potentially trigging a major shift in business rules.
Which companies are in focus?
- American Express Co. AXP, -3.62% shares were 3.4% lower after the credit card and travel services company reported a third-quarter profit that disappointed compared with expectations, while revenue topped forecasts.
- Bloomin’ Brands Inc. BLMN, -9.64% shares sank more than 7% after the restaurant company reported third-quarter losses that were narrower than expected. Net loss totaled $17.6 million, or 20 cents per share, after net income of $9.2 million, or 11 cents per share, last year.
What are other markets doing?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.838% edged back basis 0.2 point to 0.84%. Yields and bond prices move in opposite directions.
In global equities, the Shanghai Composite SHCOMP, -1.04% fell 1%, while Hong Kong’s Hang Seng Index HSI, +0.53% rose 0.5% and Japan’s Nikkei 225 NIK, +0.18% gained 0.2%. European stocks finished the week on a strong note, with the Stoxx 600 Europe Index SXXP, +0.61% closing 0.6% higher, while London’s FTSE 100 UKX, +1.29% ended with a 1.3% advance.
Oil futures were trading lower, with the U.S. crude benchmark CL.1, -1.82% off 1.8% at $41.68 a barrel on the New York Mercantile Exchange. Gold futures GOLD, -0.63% traded modestly lower, off 0.3%, but holding onto a slight weekly gain.
The ICE U.S. Dollar Index DXY, -0.09%, a measure of the currency against a basket of six major rivals, was trading little-changed after relinquishing a firmer early decline.