Dow Futures Extend Gains on Stimulus Hopes as Wall Street Rally Powers Ahead; Weekly Jobless Claims in Focus

Wall Street is looking to extend its best week since August as stimulus hopes, as well as trillions in Fed support, continue to drive markets higher heading into the start of the third quarter earnings season.

The Thursday Market Minute

  • Global stocks extend gains on U.S. stimulus hopes as lawmakers press ahead with talks of targeted support.
  • House Speaker Pelosi and Treasury Secretary Mnuchin remain engaged in negotiations as President Trump pushes for a 'piecemeal' deal before next month's elections.
  • Trump tells Fox Business that stimulus talks are progressing, and could include more than support for the airline sector.
  • Weekly jobless claims could upend risk sentiment, but Wall Street is looking to extend its best week since August heading into the teeth of the third quarter earnings season.
  • Morgan Stanley agrees to pay $7 billion to buy investment management firm Eaton Vance.
  • European stocks extend gains, rising to a four-week high, even as coronavirus infections continue to surge and lockdown discussions accelerate as cooler weather sets in.
  • Oil prices edge higher following a surprise drawdown in U.S. gasoline stocks suggests a possible uptick in domestic energy demand.
  • U.S. equity futures suggest a firmer open on Wall Street after weekly jobless claims fell to 840,000, just ahead of the Street consensus forecast of 820,000.

U.S. equity futures extended gains Thursday, pulling Wall Street benchmarks past the highest levels in more than a month, as markets continue to bet on near-term stimulus from Washington  and the potential for a decisive result from the November Presidential elections.

House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin have continued talks aimed at providing at least some relief to the coronavirus-hit economy, even after President Donald Trump ordered an end to negotiations earlier this week. 

Trump, as well as Pelosi, have indicated that a smaller, more targeted relief agreement is possible, but a more comprehensive deal will likely need to wait until after the November election, which polls continue to suggest will result in a Democratic Congress and a potential 'Blue Wave' that could deliver both a Joe Biden Presidency and control of both the Senate and the House.

In the meantime, targeted assistance for the airline industry, which is weighing the furlough of tens of thousands of workers, as well as the Federal Reserve's willingness to provide deeper monetary support in the form of accelerated monthly bond purchases and years of near-zero interest rates, continue to put a floor under U.S. stocks, which are having their best week since early August. 

Gains were extended when President Trump told Fox Business that talks were progressing, and could include support beyond the airline sector, as well as a reading of weekly jobless claims that showed new applications rose by 3,000 to 840,000

Futures contracts tied to the Dow Jones Industrial Average, which roared 530 points higher in Wednesday's rally, suggest a 180 point opening bell gain while those linked to the S&P 500 are pricing in a 17 point bump for the broader benchmark.

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Nasdaq Composite futures are priced for a 72 point advance. 

Regeneron Pharmaceuticals  (REGN) - Get Regeneron Pharmaceuticals, Inc. Report shares were a notable pre-market mover, rising 4.8% to $620.05 each after President Trump praised the drugmaker's coronavirus antibody treatment,  while Costco Wholesale Corp.  (COST) - Get Costco Wholesale Corporation Report shares are likely to be active after reporting much stronger-than-expected same-store sales for the month of September last night. 

European stocks were also firmer, with the Stoxx 600 benchmark testing a four-week high and largely tracking U.S. equity futures, even as coronavirus cases in France hit a record high yesterday and fresh lockdown measures are being discussed or implemented around various parts of the region as the autumn weather turns cooler and brings more and more people inside schools, offices and restaurants. 

The U.S. dollar index, which tracks the greenback against a basket of its global currency peers, slipped 0.03% to 93.592 while benchmark 10-year Treasury note yields held at 0.77% after yesterday's well-received auction of $35 billion. The Treasury will sell a further $23 billion in 30-year bonds later this morning.

Crude prices also climbed higher, pushing WTI prices past the $40 per barrel mark, after the Energy Department reported a drop in gasoline inventories yesterday, a signal of a potential pick-up in domestic energy demand.

WTI contracts for November delivery, the new U.S. benchmark, traded 52 cents higher from their Wednesday close in New York and changing hands at $40.47 per barrel while Brent contracts for December, the global benchmark, were seen 63 cents higher at $42.62 per barrel.

Overnight in Asia, Japan's Nikkei 225 took the baton from Wall Street to rally nearly 1% as the yen eased to 105.96 against the dollar and risk sentiment improved, while the region-wide MSCI ex-Japan benchmark was last seen 0.7% higher heading into the close of trading on the strength of solid gains in Australia and Indonesia.