E-mini S&P 500 Futures (December): Settled at 3449.25, up 16.75
E-mini Nasdaq-100 Futures (December): Settled at 11,649.75, down 41.50
U.S. benchmarks are steady to higher and trading a very favorable technical roadmap.
As the stimulus impasse in Washington drags on, the market has priced out enthusiasm for a Covid-19 aid bill ahead of the election. Last night, the final presidential debate before the November 3rd election was, for all intents and purposes, normal. Both candidates had time to speak uninterrupted and headline topics were hashed out. All things considered; a politer President Trump walked away narrowing the perceived Biden lead. Arguably, such is working to buoy the tape ahead of the weekend. Then again, there are certainly lingering hopes that a massive fiscal package will be passed in the coming 60 days.
Fresh October Manufacturing PMIs are out today. The Eurozone posted a steady expansion in manufacturing, 54.1 versus 53.1 expected and 53.7 last month, however, the services sector continues to show distress. After dipping into a surprise contraction last month at 48.0, today’s 46.2 was worse than the 47.0 expected. The results dragged the composite read into contract at 49.4 and highlights fears of a double-dip recession. Readers must understand that although manufacturing was seemingly strong, the expansion was from a much lower baseline given 18 consecutive months of contractions dating back to February 2018. In fact, it was the pandemic lockdowns through April, and May that suppressed contraction reads below 40, creating a capitulation of sorts that the economy could only then improve upon. In conclusion, these certainly aren't celebratory results.
As for the U.S., Flash PMIs are due at 8:45 a.m. CT. Steady expansions of both the manufacturing and services sectors are expected. After contractions in each began in March, they began expanding in July and August, respectively. Still, such began from the depths of consecutive months contracting below 40. Regardless, the U.S. is clawing out of its recession much better than Europe with Q3 GDP prospects between 20% and 40% on a seasonally adjusted annual rate basis. We look forward to this release next Thursday.
Despite the snap back in growth, the virus resurgence is beginning to weigh on sentiment. However, the Federal Reserve’s monetary stimulus measures (ZIRP and balance sheet expansion) are offsetting those fears, but that is why fiscal stimulus is now increasingly critical.
Of note, Intel is down 10% premarket although beating earnings estimates after the bell yesterday. Data center revenue is the culprit. Gilead is up nearly 5% ahead of the bell after the FDA approved their Remdesivir as a Covid-19 treatment. Traders may also want to keep an eye on Johnson & Johnson, Moderna, and Pfizer after President Trump pointed them out as making progress on Covid-19 fighting drugs in last night’s debate.
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