A Heated Presidential Debate Cools Equity Markets

September 30, 2020 09:59 AM
Expect a continued choppy trade through the next debates,
ADP Payroll survey printed a gain of 749,000 jobs in September
Mixed Chinese manufacturing data
Stock Market Update for Traders

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Tuesday's Close

E-mini S&P 500 Futures (December): Settled at 3333.75, down 12.25

E-mini Nasdaq-100 Futures (December): Settled at 11,337.75, down 57

U.S. benchmarks are paring the week’s gains after a heated debate between President Trump and former Vice President Biden; we didn't expect anything less.

Yesterday, due to our uncertain outlook ahead of the showdown, we emphasized a very neutral stance although our upside targets hadn't quite been achieved. Ultimately, we expect a continued choppy trade through the next debates, scheduled for October 15 and 22, and heading into the election. However, there is an outlier, if Congress can agree on a bipartisan fiscal package. We believe the passing of fresh Covid-19 aid would lift risk assets and send both the S&P 500 and Nasdaq-100 indexes through their respective overhead technical resistance levels. 

Jobs are also front and center this morning and through the end of the week. The private ADP Payroll survey printed a gain of 749,000 jobs in September, more than the 650,000 expected. This comes as Disney announced it will lay off 28,000 workers across its resorts, theme parks, cruise lines, and retail due to constraints tied to Covid-19. Potential cuts from the airlines also lurks in the backgrounds. Shell also announced it will cut up to 9,000 jobs through the end of 2022 as the pandemic weighs on their industry. 

Last night, manufacturing data from China was mixed with the headline PMI read coming in at 51.5 versus 51.2 and the HSBC Caixin survey coming in at 53.0 versus 53.1. From the U.S., the final print on Q2 GDP came in better than expected this morning at -31.4% versus -31.7% from the second preliminary read. Chicago PMI was up next, followed by Pending Home Sales. European Central Bank Executive Board member Phillip Lane spoke at 9:00 a.m. CT. Minneapolis Fed President Neel Kashkari speaks at 10:00 a.m. CT, San Francisco Fed President Michelle Bowman follows at 12:40 p.m. CT, and Dallas Fed President Robert Kaplan is at 5:00 p.m. CT. Tomorrow, we look the Fed’s preferred inflation indicator, the Core PCE Index.

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