Economic news

U.S. Stocks Open Higher on Strong Jobs Data

U.S. stock indexes opened higher Wednesday as investors focused on brighter economic data and some promising signs from companies working on COVID-19 treatments, instead of a rancorous first presidential election debate.

How are stock benchmarks performing?

The Dow Jones Industrial Average opened higher by about 191 points, or 0.7%, at 27,644; while the S&P 500 index gained about 18 points, 0.5%, to open near 3,353. The Nasdaq Composite was up 0.4%, 45 points, trading near 11,130, after the bell.

On Tuesday, all three of the equity indexes snapped a three-session string of wins. The Dow fell 131.40 points, or 0.5%, to end at 27,452.66; while the S&P 500 index closed 16.13 points, or 0.5%, lower at 3,335.47, and Nasdaq Composite Index slipped 32.28 points, or 0.3%, finishing at 11,085.25. All three major equity indexes snapped three sessions of gains.

What’s driving the market?

In U.S. economic data on Wednesday morning, Automatic Data Processing said 749,000 private-sector jobs had been created in September, ahead of estimates for a gain of 650,000, and the strongest reading in three months. Last month, the ADP data showed that 480,000 jobs were created in August.

The ADP report comes ahead of the more closely followed nonfarm-payrolls report set to be released on Friday, with 800,000 jobs estimated for September and the unemployment rate slipping to 8.2% from 8.4%.

A reading of Chicago-area business activity in September was also stronger than expected, with a reading of 62.4. And GDP losses for the second quarter were revised down to -31.4%, from -31.7%.

A report on pending home sales will be released at 10 a.m.

Diane Jaffee, senior portfolio manager at TCW, sees incremental progress in both the economy, particularly in hiring, and in the market, with some broadening of sector gains.

“I think Chairman Powell said it best: there are multiple phases for this, and we’re in phase two, a recovery from the horrific lows, but the broad damage done to the leisure industry and restaurants and small businesses is going to take a long, long time,” Jaffee told MarketWatch. “That’s why the Fed is going to be patient.”

But Jaffee thinks another round of fiscal support from Washington is critical. “While some states have stepped into the void, there are still a lot of hurting people out of there and that should be done at a national level,” she said.

In Washington D.C., Wednesday looks like high noon for efforts to pass a coronavirus fiscal stimulus package before the Nov. 3 presidential election.

A top House Democrat said late Tuesday that Democrats would be waiting until noon to hear back from the White House with a counteroffer to the new $2.2 trillion aid bill they unveiled Monday. If they vote on the bill, it could very well mean hopes for a package are dead until the post-election lame-duck session.

More positive data on potential coronavirus treatments also helped investors sentiment with Regeneron Pharmaceuticals its experimental COVID-19 drug helped reduce virus levels and improve symptoms in sick patients who weren’t hospitalized .

More positive data on potential coronavirus treatments also helped investors sentiment with Regeneron Pharmaceuticals its experimental COVID-19 drug helped reduce virus levels and improve symptoms in sick patients who weren’t hospitalized .

The first presidential debate late Wednesday night, one of a three-part series, between President Donald Trump and Democratic challenger former Vice President Joe Biden did little to alter the trajectory of the race for the White House or to offer clear guidance for market participants on policy.

“ It was an acrimonious, chaotic and insulting debate.,” wrote Naeem Aslam, analyst at AvaTrade in a note.

Aslam said that the rancor and testiness displayed during the heated 90-minute clash at Case Western University in Cleveland may signify the growing possibility of an uncertain outcome in the Nov. 3 contest which could roil markets in the short term.

“The presidential debate reinforced the market concerns that Trump isn’t going to accept his defeat that easily,” the AvaTrade analysts wrote. “This creates the biggest risk for not only the U.S. stock market rally but we are seeing the global stock market taking a nose dive today,” he said.

Both candidates suggested that the presidency may not be decided on Election Day.

Which stocks are in focus?
  • Palantir Technologies Inc. is set to make its public debut, via a direct listing, on the New York Stock Exchange.
  • Duke Energy shares jumped 6.4% in early trade after The Wall Street Journal reported that NextEra Energy recently made a takeover approach.
  • Walt Disney shares fell 1.5% after the entertainment giant said on Tuesday that it plans to lay off about 28,000 employees at its domestic theme parks.
  • Regeneron Pharmaceuticals said on Tuesday that its experimental COVID-19 drug helped reduce virus levels and improve symptoms in sick patients who weren’t hospitalized. Shares were up 1.8% after the bell.
  • Moderna said a small study showed in early-stage testing that its coronavirus vaccine can generate neutralizing antibodies in older and elderly adults. The stock gained 3.8%.
  • Hasbro Inc. shares rose nearly 4% in early action after an upgrade from Stifel analysts.
How are other markets performing?

The 10-year Treasury note yield edged 0.3 basis point higher to 0.657%, with little direction after the debate. Bond prices move inversely to yields.

U.S. benchmark crude futures for November delivery traded 2 cents lower, at $39.27 a barrel on the New York Mercantile Exchange, weighed down by concerns about rising case counts. Gold futures dipped 0.1%, at $1,900.10 an ounce, as the dollar rose.

In global equities, the Stoxx Europe 600 index traded 0.1% higher, as did the U.K.’s FTSE 100. In Asia overnight, Japan’s Nikkei lost 1.5% and Hong Kong’s Hang Seng Index closed 0.8% higher.

The ICE U.S. Dollar index, a gauge of the greenback’s strength against a basket of currency trading partners, was up 0.2%.

Source: Marketwatch

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