Morning Minutes 10/7/2020

Morning Minutes

Stocks Bounce Back Amid Stimulus Talk and Tweets

October 7, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

US equity markets had been marching steadily higher yesterday responding to calls from Fed Chair Powell for more fiscal support for the economy to work hand-in-hand with monetary support, warnings that a lack of support could slow the recovery and suggesting that the risk of not enough stimulus was higher than the risk of too much stimulus. In the last two hours of Tuesday trading, however, the bandwagon hit a pothole after President Trump announced that he has called off stimulus package negotiations until after the election, which send US indices to losses of 1.4% to 1.6% on the day.

This morning finds US index futures on the rebound after President Trump indicated that he is willing to support specific measures immediately including a new set of $1,200 cheques for individuals, plus support packages for the airline sector and small businesses. Currently, the three main US index futures contracts are all trading up about 0.8% approximately clawing back about half of yesterday’s losses.

In earnings news, Clothier Levi Strauss is up 13.1% in premarket trading today after reporting a quarterly profit of $0.07, significantly better than the $0.22 per share loss analysts had feared. Similarly, sales, although down 27% over year, were not as bad as thought ($1.066B vs street 822M), boosted by a 52% increase in online sales. Management suggested that next quarter’s sales decline could shrink to -14% to -15% over year if business conditions don’t worsen again.

It’s a light day for economic news. Canada Ivey PMI is due at 10:00 am EDT (previous 64.6). Minutes of the last Fed meeting are due at 2:00 pm but may be dated in the wake of Chair Powell’s recent comments. Tonight the two US Vice-Presidential candidates are debating each other at 9:00 pm EDT.

 

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