Last Week's Close
E-mini S&P 500 Futures (December): Settled at 3316.25, down 34.75 on Friday and 7.00 on the week
E-mini Nasdaq-100 Futures (December): Settled at 10,927, down 148.25 on Friday and down 121.25
U.S. benchmarks remained vulnerable through Friday, setting new swing lows following the expiration of September futures and options at the opening bell.
Added selling ensued overnight after leaked files from FinCEN were published showing that banks filed trillions of dollars’ worth of suspicious activity reports. More specifically, it signals banks were very aware of suspicious activity, but did little to slow it down. All major banks were down sharply with the Financial Sector SPDR fund -3% ahead of the bell. Some of the largest around the globe are getting hit the hardest; Deutsche Bank -7%, HSBC -5% and JPMorgan -4.5%.
Today’s news is a great example as to the market paying attention to the headlines it wants; something we often discuss. If stocks haven’t already been vulnerable, or in a healthy correction pattern, we may not be seeing such damage across the banking sector weighing on the market broadly. Investors and managers are already in a defensive position and this certainly can help exacerbate the impact of headlines. However, this comes as the banks have been clear laggards during the Covid-19 recovery and their profitability is in question amid zero interest rate policy.
Also driving sentiment are U.S.-China relations and Washington. On one hand President Trump approved the ByteDance-Oracle deal, on the other ByteDance did say it wouldn’t transfer any technology.
Supreme Court Justice Ruth Bader Ginsburg's death has quickly brought added tension to Washington ahead of the election. President Trump announced his plan to nominate a replacement, a move that his opposition will fight and that begs to tie up bandwidth for a potential fiscal deal. Meanwhile, the second wave of the Covid-19 pandemic makes its way through Europe causing the U.K. government to tighten restrictions.
Fed Chair Jerome Powell spoke at 9:00 a.m. CT. Fed Governor Lael Brainard follows at 11:00 a.m. and Dallas Fed President Robert Kaplan at 5:00 p.m. along with New York Fed President John Williams.