Investors Look To DOL Report, Stimulus Prospects, Corporate Earnings On Thursday

As the Department of Labor’s (DOL) latest jobs report, mounting uncertainty over another round of government stimulus, and more corporate earnings reports weighed on investors; stock futures diverged throughout Wednesday night trading. After-hours trading began with futures for the S&P 500 and Down up 0.04% and 0.05%, respectively, while the Nasdaq shed 0.09%.

The DOL jobs report will release Thursday morning and is expected to show 825,000 more Americans who filed for unemployment benefits for the first time last week. Although it is modest progress for the labor market, the still-elevated figure is troublesome because of the absence of more federal aid during the pandemic.

“The decline in continuing claims is welcome, but initial claims offer a better read on the real-time state of the labor market, and the downward trend has stalled, more or less,” Pantheon Macroeconomics’ chief economist Ian Shepherdson recently wrote.

“The last significant weekly drop in initial claims was back in the final week of August, and that happened only because the Labor Department changed the seasonal adjustment methodology and did not revise the prior data,” he continued. “Using the old seasonals, initial claims haven’t fallen much since early August. This is consistent with the weakening Homebase small business employment numbers, which have been depressed – we assume – by people choosing to reduce their social interactions in the face of rebounding virus cases and hospitalizations.”

Investors are focused on the likelihood of another stimulus bill appearing in the upcoming weeks before the election, despite lawmakers signaling otherwise. During Wednesday’s Milken Institute Global Conference, Treasury Secretary Steven Mnuchin noted that “getting something done before the election and executing on that would be difficult, just given where we are in the level of details,” citing his recent negotiations with House Speaker Nancy Pelosi. The two officials will follow up on their Wednesday talks this Thursday.

Mnuchin’s statements sent the Dow, S&P 500, and Nasdaq to their lowest point in the session, with many seeing further assistance for struggling Americans and businesses as a critical factor in sustaining economic recovery.

Wednesday marked the second consecutive day of losses for the S&P 500. The index shed points as several of the country’s largest banks issued quarterly results that fell short of economists’ projections. Wells Fargo netted less than half of last year’s revenue, while Bank of America’s profits, sales, and trading outcomes underperformed compared to JPMorgan, Chase, and Citigroup. 

Meanwhile, Goldman Sachs led the financial sector, smashing profit expectations by nearly double what it earned last year. The banking giant’s strong performance is mainly attributed to robust fixed-income investing and asset management earnings.

Although firms like Wells Fargo and Bank of America reported disappointing third-quarter outcomes, many executives have signaled that their institutions may have overcome the worst of the pandemic’s financial fallout. However, many recognize that their firms still have a long road ahead before they completely come back from a particularly dismal second-quarter.

In the meantime, investors will be looking ahead to another batch of corporate earnings from Charles Schwab, Wallgreens, Boots Alliance, and Morgan Stanley on Thursday morning.

 

Sources
  • McCormick, Emily. “Stock Market News Live Updates: Stock Futures Open Mixed after Second Day of Selling.” Yahoo! Finance, Yahoo!, 15 Oct. 2020, finance.yahoo.com/news/stock-market-news-live-october-15-2020-221401007.html.
  • McCormick, Emily. “Jobless Claims Preview: Another 825,000 Americans Likely Filed New Unemployment Claims Last Week.” Yahoo! Finance, Yahoo!, 14 Oct. 2020, finance.yahoo.com/news/jobless-claims-coronavirus-unemployment-week-ended-october-10-2020-183353138.html.

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