Market Analysis

Beyond the Numbers

Futures Pointing To Initial Weakness On Wall Street
10/26/2020 9:13 AM

The major U.S. index futures are currently pointing to a lower opening on Monday, with stocks likely to move to the downside following the mixed performance seen in the previous session.

The downward momentum on Wall Street comes amid concerns about a surge in new coronavirus cases and continued uncertainty about lawmakers’ ability to reach an agreement on a new stimulus bill.

Stocks showed a lack of direction over the course of the trading day on Friday, with the major averages bouncing back and forth across the unchanged line before eventually ending the day mixed.

The Dow posted a modest loss on the day, edging down 28.09 points or 0.1 percent to 28,335.57, while the broader Nasdaq and S&P 500 added to Thursday's gains. The Nasdaq climbed 42.28 points or 0.4 percent to 11,548.28 and the S&P 500 rose 11.90 points or 0.3 percent to 3,465.39.

Despite the mixed close on the day, the major averages all moved lower for the week. The Nasdaq slumped by 1.1 percent, the Dow slid by 0.9 percent and the S&P 500 fell by 0.5 percent.

The choppy trading on the day came amid a lack of concrete news out of Washington regarding a new coronavirus stimulus bill.

Traders have generally remained optimistic that a bill will eventually be passed, although they may be growing tired of waiting.

House Speaker Nancy Pelosi has recently suggested negotiations with Treasury Secretary Steven Mnuchin are making progress, but it seems unlikely a bill will be passed before the elections early next month.

During the final presidential debate Thursday night, President Donald Trump accused Pelosi of stalling a new relief package until after the elections for political purposes.

Trump also claimed that he could get reluctant Senate Republicans to support a broader stimulus bill if an agreement is finally reached.

A lack of major U.S. economic data may also have kept traders on the sidelines following the release of upbeat jobless claims and existing home sales data on Thursday.

Meanwhile, a steep drop by shares of Intel (INTC) weighed on the Dow, with the semiconductor giant plunging by 10.6 percent.

Intel fell sharply after reporting third quarter earnings that beat analyst estimates but on weaker than expected revenues for its Data Center Group.

Credit card giant American Express (AXP) also showed notable move to the downside after reporting third quarter earnings that missed expectations.

Reflecting the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves.

Housing stocks showed a strong move back to the upside, however, with the Philadelphia Housing Sector Index climbing by 1.8 percent after moving sharply lower over the past few sessions.

Significant was also visible among steel stocks, as reflected by the 1.2 percent gain posted by the NYSE Arca Steel Index. The index ended the session at its best closing level in eight months.

On the other hand, computer hardware stocks saw notable weakness on the day, dragging the NYSE Arca Computer Hardware Index down by 1.1 percent.

Shares of Seagate Technology (STX) came under pressure after the data storage company reported fiscal first quarter earnings that beat estimates but on weaker than expected revenues.

Commodity, Currency Markets

Crude oil futures are tumbling $1.08 to $38.77 a barrel after sliding $0.79 to $39.85 a barrel last Friday. Meanwhile, after inching up $0.60 to $1,905.20 an ounce in the previous session, gold futures are slipping $1.80 to $1,903.40 an ounce.

On the currency front, the U.S. dollar is trading at 105.03 yen versus the 104.71 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1816 compared to last Friday’s $1.1860.


Asian stocks ended mostly lower on Monday as a recent global spike in coronavirus infections coupled with a stalemate over U.S. fiscal stimulus dashed hopes for an earlier-than-expected economic recovery.

Traders are becoming increasingly pessimistic that U.S. lawmakers will pass a new stimulus package before next week's election.

The daily tally of coronavirus cases in the United States has topped 80,000 for the second straight day while record numbers of new infections in Europe has heightened the possibility of economic lockdowns.

Spain last week became the first European country to surpass 1 million officially recorded Covid-19 cases.

Chinese shares fell after liquor giant Kweichow Moutai posted slower-than-expected growth in quarterly profit. Investors also awaited the outcome of a key policy meeting of ruling Communist Party this week, where top leaders will chart the country's economic course for 2021-2025.

The benchmark Shanghai Composite index ended down 26.88 points, or 0.82 percent, at 3,251.12.

Japanese shares ended little changed as investors waited for cues from a slew of earnings and the Bank of Japan policy meeting due this week. The Nikkei average ended marginally lower at 23,494.34, while the broader Topix index closed 0.39 percent lower at 1,618.98.

ANA Holdings declined 1.1 percent after announcing it will cut about 3,500 jobs by fiscal year 2022. Electronic parts maker Murata Manufacturing climbed 2.1 percent after it made upward revisions to its profit forecast for the half-year ended September 30.

Australian shares ended slightly lower despite easing of restrictions in Victoria as the Covid-19 hotspot reported zero new cases for the first time in four months.

The benchmark S&P/ASX 200 slid 11.40 points, or 0.18 percent, to 6,155.60, while the broader All Ordinaries index ended down 16.40 points, or 0.26 percent, at 6,357.30.

Westpac shares closed 0.4 percent lower after the bank flagged a $1.2 billion hit to earnings caused by write-downs across its insurance businesses. Mining heavyweights BHP and Rio Tinto fell around 0.8 percent, while energy stocks ended with modest gains.

Healthcare stocks benefited from a weak Aussie dollar after reports of renewed outbreaks of Covid-19 in China. CSL rose half a percent and Cochlear gained over 1 percent.

Coca-Cola Amatil surged 16.3 percent after it received a $9.28 billion takeover bid from its European counterpart, Coca-Cola European Partners.

Seoul stocks fell notably as investors fretted about surging coronavirus infections at home and abroad. Domestic Covid-19 cases rose by 119 as of Sunday midnight, sharply up from 61 cases reported a day earlier. The benchmark Kospi gave up early gains to end down 16.90 points, or 0.72 percent, at 2,343.91.

Hyundai Motor, South Korea's largest automaker, jumped 2.7 percent, after unveiling its third-quarter results.


European stocks fell on Monday as a record rise in coronavirus cases in the United States and parts of Europe made investors jittery.

As stimulus hopes fade, market participants are also bracing for pre-and post-election uncertainty in the United States.

The pan European Stoxx 600 dropped half a percent to 360.53 after gaining 0.6 percent on Friday.

The German DAX fell more than 2 percent after the country registered more than 10,000 new Covid-19 cases for the fourth day in a row Sunday. France's CAC 40 index shed 0.4 percent and the U.K.'s FTSE 100 was little changed.

German heavyweight SAP plummeted 18 percent after the software company cut its revenue forecast for 2020, saying that its business would take longer than expected to recover from the coronavirus pandemic.

TeamViewer declined 1.6 percent and Capgemini lost 2.8 percent.

Bayer AG rose over 1 percent after the pharmaceutical and life sciences company announced the acquisition of Asklepios BioPharmaceutical, Inc. or AskBio, a U.S.-based biopharmaceutical company.

Student accommodation provider Unite Group fell over 1 percent after the British company announced the appointment of Richard Huntingford to succeed Phil White as Chairman.

Swiss drug major Novartis was little changed after it presented promising interim Phase II data of potential first-in-class oral therapy iptacopan (LNP023) in rare renal disease C3 glomerulopathy (C3G).

In economic releases, German business sentiment weakened in October, survey data from ifo Institute showed today. The business climate index fell to 92.7 in October from revised 93.2 in September.

The reading was below economists' forecast of 93.0. Assessment of current situation as well as expectations deteriorated in the month.

U.S. Economic Reports

The Commerce Department is scheduled to release its report on new home sales in the month of September at 10 am ET. New home sales are expected increase by 2.8 percent.
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