Stocks Fall, Dow Down 100 Points, As Fed Governor Says Stimulus Package Needed For ‘Inclusive’ Economic Recovery
The three major stock market indexes fell for the second time this week on Wednesday after failing to add back Monday losses on Tuesday, as dragging stimulus negotiations in Washington tank investor sentiment just 13 days before the November election.
Despite big earnings beats since Tuesday’s market close, the Dow Jones Industrial Average and S&P 500 were down about .4% and .3%, respectively, on Wednesday, while the tech-heavy Nasdaq fell .3%.
Shares of Dow component Verizon fell .9% after an earnings beat before the market open, while shares of car-seller AutoNation, which also reported better-than-expected earnings on Wednesday, climbed 2%.
Snap’s still on a massive tear, adding more than 28% after a blowout earnings release showing double-digit percentage growth in users and revealing both earnings and revenues that far surpassed Wall Street expectations.
Netflix, on the other hand, plummeted 7% after revealing Tuesday evening that subscriber growth slowed more than expected in the third quarter.
Global markets were a little rockier on Wednesday: The United Kingdom’s FTSE 100 ended the day down 2%, and France’s CAC 40 fell 1.5%, while Japan’s Nikkei 225 ticked up .3%.
The chaos in Washington with regards to another round of coronavirus relief has stymied meaningful stock-market growth in recent weeks, despite experts–including, most recently, Federal Reserve Governor Lael Brainard–warning that the lack of more fiscal stimulus could further slow down–and perhaps even reverse–an already sluggish economic recovery. “The recovery remains highly uncertain and highly uneven—with certain sectors and groups experiencing substantial hardship. These disparities risk holding back the recovery,” Brainard said Wednesday morning. “Further targeted fiscal support will be needed alongside accommodative monetary policy to turn this K-shaped recovery into a broad-based and inclusive recovery.”
“The speed of the recovery is being called into question by market participants as prior fiscal stimulus measures continue to fade, and the motivation for Congress to pass a fresh round of fiscal support for the economy is becoming more stale by the day,” said Charlie Ripley, a senior investment strategist for Allianz Investment Management, adding that the labor market is an area of particular concern. “Only about half the jobs lost since the lockdown have come back. Generally, the longer people remain unemployed, the more difficult it becomes to find a job as skills begin to erode.
What To Watch For
Amid the urgency of stimulus negotiations in Washington, a slew of big companies are releasing third-quarter financials this week–with 18% of S&P 500 companies reporting. Among those headlining results yet to come are Tesla and Las Vegas Sands on Wednesday after the market closes. American Airlines, Southwest Airlines and AT&T are all on Thursday.
72% Surge In New Covid Cases Is Slowing Economic Recovery, BoA Says (Forbes)
Netflix Subscriber Growth Slows After Surging During Pandemic (Forbes)
Snap Stock Soars 20% To New All-Time High On Earnings Beat And Massive User Growth (Forbes)
Stocks Tick Up, Dow Climbs 100 Points, As Stimulus Negotiations Look To Drag On Past ‘Deadline’ (Forbes)