Stocks were lower Wednesday, October 28—historically the best day of the year for the stock market—as the latest COVID-19 outbreak and election uncertainty weighed. Today market participants will take cues from the GDP report, jobless claims, and earnings reports from some of the biggest names in tech.
- US stocks opened little changed after the spike in US GDP.
- European stocks are lower in midday trading amid renewed virus restrictions.
- The European Central Bank hinted more stimulus may be coming in December.
- Asian markets closed mostly lower.
- The Bank of Japan cut its GDP growth forecast for 2020 to -5.5% from -4.7%, but raised its 2021 forecast slightly to +3.6%.
Jobless claims beat
The continuing decline in jobless claims is welcome as COVID-19 cases in the United States and around the world have continued to climb in recent weeks.
- 751,000 Americans filed for unemployment last week, less than Bloomberg expectations of 770,000.
- Unemployment filings fell for the third consecutive week.
- Continuing claims for unemployment declined to 7.75 million, beating Bloomberg consensus for 7.77 million.
Global trade storms back
Global trade volumes have risen solidly, reflecting the strength of the global economic recovery and suggesting the global recession probably ended this summer. According to data from the CPB Netherlands Bureau, world trade volumes rose by 2.5% in August, adding to the 7.8% and 5% increases in June and July, leaving trade volumes just 3.5% below their December 2019 level. Retail sales have been a big part of the global recovery story.
Regeneron said data from a late-stage clinical trial suggests that its antibody cocktail therapy significantly reduces virus levels and the need for further medical care. Dr. Anthony Fauci said he expects a vaccine to be available in January at the earliest.
Stocks are near flat in early trading following the largest daily loss for the S&P 500 Index since June. The index closed at 3271 and has key support at the September low point of 3209. Despite the risk-off move, Treasury yields were higher on the day, and tech stocks underperformed, a sharp contrast to the bear market that began in February.
New US COVID-19 cases rose 37% compared with the prior week, while the seven-day average jumped 24% to over 73,000, the 20th straight day with a double-digit increase (source: COVID Tracking Project). Hospitalizations continue to rise steadily at near 2,500 per day. Cases in France, Germany, and Spain set fresh record daily highs.
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