Global Economy

Stocks are set to fall for a third day as Dow futures slide nearly 300 points


Futures were lower Thursday, pointing to a third straight day of losses for the U.S. stock market.

Dow Jones Industrial Average futures were down 280 points, or 1%. S&P 500 futures lost 1%. Nasdaq 100 futures dropped 1.5% as shares of big technology companies slid.

Here’s what traders were watching:

  • Investors are waiting for any sign a coronavirus aid deal is still possible. Treasury Secretary Steven Mnuchin said on Wednesday that reaching a coronavirus stimulus deal before the election would be difficult as Democrats and Republicans remain far apart on certain issues. His comments came after House Speaker Nancy Pelosi, D-Calif., said earlier this week that a recently proposed package by the administration “falls significantly short” of what is needed.
  • European governments are reinstituting pandemic restrictions to curb a second wave of the coronavirus. France has declared a public health state of emergency and the U.K. is nearing a second national lockdown. European stock benchmarks lost more than 2%.
  • France and Netherlands are endorsing a plan for the EU to curb the power of Big Tech, including by possibly breaking them up, according to the Financial Times. Facebook, Apple and Alphabet shares were each lower by about 2% in premarket trading following the report.
  • Third-quarter earnings are continuing to roll out. Morgan Stanley reported third quarter profit of $2.7 billion, or $1.66 per share, exceeding the $1.28 estimate of analysts surveyed by Refinitiv. It generated revenue of $11.7 billion on the back of strong trading, 16% higher than a year earlier and a billion dollars more than the estimate.
  • Banking giants Goldman Sachs, Wells Fargo and Bank of America reported their latest quarterly results on Wednesday along with United Airlines. Goldman and Bank of America’s results topped analyst expectations. However, Wells Fargo and United fell short of estimates.

The uncertainty surrounding the aid talks led to the market’s second straight daily decline Wednesday. The Dow slid more than 160 points, or 0.6%. The S&P 500 and Nasdaq Composite pulled back by 0.7% and 0.8%, respectively. Wednesday marked the first time since September that the major indexes posted consecutive daily losses.

“Market volatility is set to continue in the weeks ahead as investors brace for a host of uncertainties—the timing of vaccine availability (after a setback for Johnson & Johnson), the size and timing of additional US fiscal stimulus, and the election outcome,” wrote Mark Haefele, chief investment officer of global wealth management at UBS. “The uneven recovery in the US economy also adds to investor concerns as the results season kicked off this week.”

On the data front, weekly jobless claims numbers are set for release Thursday morning along with the latest data on import and export prices.

“This is the second earnings season in the wake of the Covid-19 pandemic … and arguably this will be one of the most important earnings seasons ever,” wrote Jeff Kilburg, CEO at KKM Financial. “As investors globally try to gauge the actual damage inflicted upon the economy by Covid-19, expectations are simply that earnings will not be as bad as they were in Q2.”

“In the event we have an overall positive tone transmitted, I believe the path for U.S. equites is higher,” Kilburg added.

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