Morning Minutes 10/13/2020

Morning Minutes

Stocks Consolidate Gains as Earnings Season Starts

October 13, 2020

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

US index futures are mixed this morning, varying between a 0.4% decline for Dow futures to a 0.9% gain for NASDAQ  futures as US markets consolidate Monday’s gains of 0.8% for the Dow Industrials, 1.6% for the S&P 500 and 2.6% for the NASDAQ Composite.

It’s the first day of the long-awaited Q3 earnings season with investors looking for insight into the strength and momentum of the summer economic reopening rebound, with big banks in the spotlight for the first few days. Highlights of today’s reports include:

JPMorgan Chase is up 1.6% premarket after posting EPS well above expectations ($2.92 vs street $2.33), boosted by higher than expected trading income and a $569 million decrease to its loan loss provision. Citigroup is up 2.0% premarket after the bank beat the street handily on EPS ($1.40 vs street $0.93). Asset manager Blackrock is up 3.7% premarket after announcing stronger than expected EPS ($9.22 vs street $7.80) and a $129B inflow of assets.

Outside the Financials sector, Johnson & Johnson is down 2.0% in premarket trading today as news that the company has paused its COVID vaccine trial after one of the participants unexpectedly fell ill overshadowed strong earnings. The company beat the street on EPS ($2.20 vs street $1.98) and raised its full year EPS guidance by $0.20 on both sides to the $7.95-$8.05 range. Walt Disney, meanwhile, is up 4.0% premarket this morning after announcing last night it is reorganizing its content operations to focus more on streaming.

In economic news, China’s trade surplus unexpectedly shrank significantly last month ($37.0B vs street $59.9B) as imports surged (13.2% vs street 0.2%), while exports came in essentially as expected (9.9% vs street 10.0%). Commodities have had a mixed response to this news, with WTI and Brent Crude oil rallying 2.0%-2.2%, but copper sliding 0.5%.

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