The Thursday Market Minute
- Global stocks rebound from biggest decline in four months as earnings distract from surging coronavirus infections.
- Lockdowns in France and Germany highlight scale of second wave in Europe, while U.S. infections hit record high 80,662 as health officials warn of more spread to come.
- The busiest day of the earnings season sees three major tech giants reporting after the bell, including Apple, Amazon and Facebook, with Wall Street also digesting Q3 GDP data and weekly jobless claims.
- The European Central Bank holds key rates unchanged and hints of extended support now that the Continent's growth prospects have faded in the face of a second wave infection surge.
- Wall Street futures suggest a softer open amid earnings from Twitter, Comcast, ConcoPhillips and Kraft Heinz as well as third quarter GDP data and weekly jobless claims.
U.S. equity futures turned lower Thursday as Wall Street looked to recover from its biggest single-day decline in four months amid rising coronavirus infection rates around the world and creeping uncertainty over the prospect of a definitive election result next week.
The Dow's 940 collapse last night extended a four-day stretch that has loped more than 6.5% from the benchmark as investors pare back risk in the face of record coronavirus infections at home and lockdowns in the biggest economies in Europe.
Both Germany and France unveiled tough restrictions on business and travel yesterday, with Spain declaring a six-month state of emergency as the Continent's second-wave disrupts public life and adds even more pressure to European Central Bank policymakers as they prepare for their monthly meeting in Frankfurt later today.
The ECB said it would 'carefully monitor' incoming data as it kept its key rates unchanged, suggesting it could alter some of its policy tools when it meets again in December.
In the U.S., the busiest day of the earnings season, as well as the first reading of third quarter GDP, is likely to distract the market's focus from a record rise in domestic COVID infections, as well as a warning from Dr. Anthony Fauci that the country is heading "in the wrong direction" as colder weather and the winter months approach.
Apple (AAPL) - Get Report, Amazon (AMZN) - Get Report and Google (GOOGL) - Get Report will report quarterly earnings after the close of trading today, with Twitter (TWTR) - Get Report, ConocoPhillips (COP) - Get Report, Comcast (CMCSA) - Get Report and Kraft Heinz (KHC) - Get Report slated to update prior to the start of trading in an earnings season that has been much stronger-than-expected, but still looks set to show that collective S&P 500 profits have fallen more than 12.5% from last year.
However, even with Q3 GDP rising 33.1% -- the biggest gain on record -- and weekly jobless claims falling to 751,000, Wall Street is still looking at a softer start to the Thursday trading day.
Futures Contracts tied to the Dow Jones Industrial Average suggest a 30 point opening bell decline, while those linked to the S&P 500 are priced for a modest 5.5 point gain. Neither moves, however, are likely to keep the benchmarks from recording their biggest monthly declines since March.
In Europe, stocks rebounded from a five-month low in early Thursday trading thanks in part to a series of solid earnings updates from bluechips in all key markets, including Royal Dutch Shell (RDS.B) - Get Report, which topped profit forecasts and boosted its dividend, and carmaker Volkswagen AG, which drove to higher-than-expected net income thanks to surging sales in China.
The Stoxx 600 was marked 0.34% lower by mid-day trading in Frankfurt as U.S. futures faded, while the FTSE 100 fell 0.11% in London ahead of the ECB policy decision at 8:45 am Eastern time.
Away from equities, the U.S. dollar index extended gains against a basket of global currency peers in overnight trading, rising 0.2% to 93.601. The VIX index, a key gauge of market volatility, also extended its recent advance, rising 18.9% to an early June high of 39.64 points.
Global oil prices, which were hammered by concerns for energy demand in the face of European lockdowns and slowing domestic growth, extended declines again Thursday even as Hurricane Zeta pulls workers from key installations in the Gulf of Mexico as it slams the Louisiana coast.
WTI contracts for December delivery, the new U.S. benchmark, traded $1.40 lower from their Wednesday close in New York and were changing hands at $35.99 per barrel in early European dealing while Brent contracts for December, the global benchmark, were seen $1.43 lower at $37.69 per barrel.
Wall Street's Wednesday sell-off hit Asia stocks hard, although the region managed to keep loses in check by the close of the session, with the Nikkei 225 falling 0.37% in Tokyo and the MSCI ex-Japan benchmark falling 0.52% into the final hours of trading.