Dow Futures Gain Ahead of Busy Earnings Week, Stimulus Hopes; Global Coronavirus Cases Top 40 Million

Wall Street faces a key five-day stretch of 91 S&P 500 earnings, make-or-break stimulus talks in Washington, a speech from Fed Chair Jerome Powell and the specter of rising coronavirus infection rates in major economies around the world.
Author:
Updated:
Original:

The Monday Market Minute

  • Global stocks start with week on a positive note, with investors eye vaccine developments and the potential for a last-minute stimulus deal from Washington.
  • House Speaker Nancy Pelosi says a pre-election deal needs to be agreed in the next 48 hours, but remains hopeful the current gap between Republican and Democratic relief bills can be breached. 
  • Senate Leader Mitch McConnell, meanwhile, will bring a targeted $500 million bill to the floor this week, suggesting he and his colleagues aren't prepared to agree to a larger package.
  • Global coronavirus cases pass the 40 million mark, while a resurgence in Europe threatens stricter and more comprehensive lockdowns in some of the world's biggest economies.
  • China GDP growth 4.9% over the third quarter, an improvement over the first half of the year but still falling shy of economists' forecasts.
  • Wall Street futures trade higher heading into the start of a busy earnings week, with 91 companies reporting, as well as an 8:00 am Eastern time speech from Fed Chairman Jerome Powell to the annual meeting of the IMF in Washington.

U.S. equity futures traded higher Monday, while the dollar retreated and oil prices held steady, as markets prepped for a key week of corporate earnings, stimulus negotiations and the election home stretch against a backdrop of relentlessly rising coronavirus infection rates.

Global cases surged past 40 million over the weekend, according to data from Johns Hopkins University, with Europe's so-called 'second wave' triggering travel and  business restrictions in some economies while health officials have called for full lockdowns in others, including the United Kingdom.

U.S. markets, however, have largely ignored the uptick in domestic cases, which hit 72,000 over a single day late last week to take the national total past 8.2 million, and instead continue to focus on the chances of a fresh stimulus package from Washington.

House Speaker Nancy Pelosi told ABC's 'This Week" program Sunday that, in order for a deal to be agreed before the November 3 election, significant advances would need to be made over the next 48 hours.

Markets will also be acutely sensitive to this week parade of corporate earnings, which will include 91 S&P 500 companies over the next 5 days, and include heavyweights such as Amazon  (AMZN) - Get Report, Microsoft  (MSFT) - Get Report, Tesla  (TSLA) - Get Report and IBM  (IBM) - Get Report

Third quarter earnings estimates have modestly improved since the start of the reporting season two weeks ago, but are still forecast to fall 18.7% from last year, and a further 12.5% over the three months ending in December.

Still, with the hope of stimulus on the horizon, and no planned changes in the Federal Reserve's ongoing support for interest rate markets, Wall Street is looking to extend gains to start the week, with futures contracts tied to the Dow Jones Industrial Average indicating a 65 point advance and those linked to the S&P 500 price for a 10 gain. Nasdaq Composite futures are guiding to a 55 point opening bell bump. 

European stocks, as well, were riding an early wave of optimism following a report from the Times newspaper in London that suggested AstraZeneca's  (AZN) - Get Report experimental coronavirus vaccine could be ready for a mass roll-out by the end of the year.

The Stoxx 600, however, gave back those gains as U.S. equity futures faded, with the benchmark slipping 0.05% by mid-day trading in Frankfurt and Britain's FTSE 100 falling 0.35% lower in London.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked  0.44% lower at 93.267 in early European dealing, while benchmark 10-year Treasury note yields were little-changed at 0.772%.

Global oil prices were also slipping lower during European trade, despite the weaker dollar, as investors reacted to weaker-than-expected GDP data from China, as well as slumping September crude imports from the world's biggest energy market. 

WTI contracts for November delivery, the U.S. benchmark, traded 21 cents lower from their Friday close in New York and were changing hands at $40.67 per barrel in early European dealing while Brent contracts for December, the global benchmark, were seen 20 cents lower at $42.73 per barrel.

Overnight in Asia, China's official statistics office said third quarter GDP growth was pegged at 4.9%, a figure that showed a solid acceleration from the 3.2% pace in the second quarter but missed analysts' forecast of a 5.2% advance.

The news trimmed gains for China stocks, which closed in negative territory for the session, but failed to hold down gains for the broader MSCI ex-Japan benchmark of regional shares, which headed into the close with a 0.53% advance. 

Japan's Nikkei 225, meanwhile, closed 1.1% higher on the session at 23,671.13 points.