U.S. Benchmarks Are Consolidating at Crucial Levels

October 22, 2020 09:10 AM
Stimulus negotiations will continue today
Weekly Jobless Claims were broadly better than expected
Coca-Cola and Dow Inc. topped earnings estimates
Stock Market Update for Traders

Stock Market Update for Traders

Wednesday's Close

E-mini S&P 500 (December): Settled at 3432.50, up 0.25

E-mini Nasdaq-100 (December): Settled at 11,691.25, up 30.50

U.S. benchmarks are consolidating at crucial levels of technical support as the stimulus circus drags on. Negotiations between U.S. Treasury Secretary Mnuchin and House Speaker Pelosi will continue into today with the major roadblock being state and local funding. In a tweet late yesterday, President Trump pointed to Democrats as holding out on a Coronavirus Aid deal in order to “BAIL OUT poorly run (and high crime) Democrat cities and states”. Exhaustion is certainly setting in on these negotiations, but the market remains constructive and hopeful.

Ultimately, we have said multiple times we do not expect a deal ahead of the election but anticipate one within a reasonable time after. Furthermore, our Bullish, yet very cautious Bias, characterizes our upbeat longer-term outlook and how we believe dips are a buying opportunity from an investment standpoint. However, caution must be exercised into and through the election. In fact, back in 2016 a wait and see approach paid off very well when opportunities arose as early as election night. Tonight, the country will be watching the two candidates bump heads in the final debate before the November 3rd election.

Weekly Jobless Claims were broadly better than expected this morning. Both Continuing and Initial Claims trekked to a new pandemic low of 8.37 million and 787,000. The Treasury will auction off 4-week, 8-week, and 5-year TIPS this afternoon. Richmond Fed President Barkin, a 2021 voter, speaks at 12:10 am CT and Dallas Fed President Kaplan, a 2020 voter, speaks at 5:00 pm CT.

On the earnings front, both Coca-Cola and Dow Inc. topped estimates and are up 3% and 1.5% ahead of the bell although their results were arguably underwhelming. Coca-Cola’s revenue slipped by 9% YoY and Dow reported a loss. Freeport-McMoRan is one as commodity traders we love to keep a pulse on; they turned a profit when compared to a year ago due to the rise in Gold and Copper prices.

Yesterday, after the bell, Tesla reported its fifth straight quarter of profits and is up 4-5% ahead of the open. Chipotle, however, is down 5% premarket as the company added deliveries and bears the rising costs of the maneuver; this could open the door for a buying opportunity given the steady rise in sales.

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