U.S. Stocks Open Higher Ahead of Stimulus Talks Deadline
By Anna Hirtenstein
U.S. stocks ticked up ahead of House Speaker Nancy Pelosi's
Tuesday deadline for Congress to reach an agreement on a spending
package to support American households and businesses through the
The S&P 500 rose 0.5%, taking back some of its losses from
earlier in the week. The broad-market index fell 1.6% Monday as
investors grew concerned that lawmakers weren't making progress on
The Dow Jones Industrial Average, meanwhile, opened 95 points
higher. The tech-heavy Nasdaq Composite Index advanced 0.5%.
Mrs. Pelosi has indicated that the White House needs to reach a
deal with Democrats by the end of Tuesday if the government wants
to pass the next coronavirus-relief bill before Election Day. The
California Democrat and Treasury Secretary Steven Mnuchin edged
closer on some policy differences holding up a sweeping coronavirus
relief package, but disputes remained. Both sides said they are
continuing to work on the matter.
"There has to be some form of a deal: the most likely outcome is
that they'll have to do something. Given what's happening with
Covid, the economy needs some support and markets need some form of
guidance," said Peter Dixon, an economist at Commerzbank. But "we
are really running out of time," he cautioned.
Markets have swung in recent weeks on every twist in the talks.
If passed, the stimulus package could drive a further rally in
In bond markets, the yield on the benchmark 10-year U.S.
Treasury note ticked up to 0.788%, from 0.760% on Monday.
Investors are also continuing to assess the elevated number of
new coronavirus infections in the U.S. and Europe in recent weeks.
Restrictions in some countries including the U.K. and France have
been tightened, though most governments have avoided halting
business activity completely, shielding the economy from the worst
of the fallout.
"On the virus front, headlines are getting worse, but our base
case is still that there won't be another full lockdown," said
Fahad Kamal, chief investment officer at Kleinwort Hambros.
"There's still a big difference between localized, targeted
lockdowns and the shutdowns we had in March and April."
Overseas, the pan-continental Stoxx Europe 600 edged down 0.1%.
In European equities, Logitech rallied 15% after it posted a
massive jump in sales from a spike in demand for computer equipment
as more people worked from home. UBS shares rose 4% after it said
its net profit doubled from a surge in trading and it is setting
aside billions for dividends and share buybacks.
China's Shanghai Composite Index advanced 0.5% by the close of
trading, while Japan's Nikkei 225 retreated 0.4%.
Permits for new construction in the U.S. were at 1.553 million
in September, rising moderately compared with the previous month.
The figures were slightly above economists' expectations,
reflecting a continued recovery in the bedrock industry.
Shares of consumer retail company Procter & Gamble rose 1.5%
premarket after it reported a surge in sales and revised up its
expectations for growth and plans for stock buybacks next year.
Technology firms Netflix and Snap, the developer of the SnapChat
app, are expected to release earnings after the market closes.
Netflix in particular will be closely watched for indications of
the extent to which tech companies are continuing to benefit from
people spending more time at home during the pandemic, according to
Mr. Kamal. The stock has been among the best performers this year,
and has climbed over 60% so far.
Strong results from Netflix will "be the latest bit of
validation on whether the enormous valuations that we're paying, do
they make sense?" Mr. Kamal said. "It will be reflective of the
stay-at-home trade in the wider sense, the trade that's been by far
the winner over the course of this year."
Ahead of the opening bell in New York, shares of drugmaker
Moderna rose 2.6% after it said its coronavirus vaccine could be
authorized in December if it gets positive results next month from
its clinical trial. IBM shares dropped 3.7% after it reported
results after hours, which included a decline in revenue and no
guidance on its outlook.
Write to Anna Hirtenstein at firstname.lastname@example.org
(END) Dow Jones Newswires
October 20, 2020 09:47 ET (13:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.