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End of Day Briefing - Recap of Thursday Oct. 22, 2020

Stocks end higher as Pelosi 'optimistic' on reaching a stimulus deal

Stocks spent another morning fluctuating around the flat-line as politicians continued to signal hope that a stimulus deal may still be reached, although one has not been announced yet. The S&P managed to eke out a gain for the day as investors waded through the pick up in earnings reports while they awaited the next stimulus headline.

ECONOMIC EVENTS: In the U.S., initial jobless claims declined 55,000 to 787,000 in the week ended October 17. Existing home sales rose 9.4% to a 6.54M rate in September. The leading economic indicators index climbed 0.9% to 107.2 in September.

Meanwhile, House Speaker Nancy Pelosi said during an interview on MSNBC early this morning that she is "optimistic" on reaching a stimulus deal with Republicans, stating that progress has been made but the two sides are "not there" yet. In a subsequent press conference, the speaker said the two sides are "just about there" on a stimulus agreement.

TOP NEWS: Shares of Tesla ($TSLA) closed fractionally higher following the company's earnings report after last night's closing bell. While Tesla's results converted analysts at Baird and JMP Securities to the bull camp, bears - such as GLJ Research analyst Gordon Johnson - also dug in with recommendations to sell the shares.

In other earnings news, Coca-Cola ($KO) shares rose 1.4% after the beverage giant reported better than expected sales and earnings, with chairman and CEO James Quincey telling investors that "while many challenges still lie ahead, our progress in the quarter gives me confidence we are on the right path."

AT&T ($T) shares gained 5.8% after the communications services company reported in-line earnings and better than expected revenue.

Goldman Sachs ($GS) will claw back tens of millions of dollars from CEO David Solomon, former CEO Lloyd Blankfein and other current and former executives after agreeing to a settlement to resolve multiple government investigations into its role in the 1MDB scandal, The Wall Street Journal reported. The Department of Justice announced that Goldman Sachs will pay more than $2.9B as part of a coordinated resolution with criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere related to its role in fund raising transactions for 1Malaysia Development Berhad, or 1MDB. Later, the bank said in a regulatory filing that the settlements do not resolve the civil litigation related to 1MDB.

Meanwhile, shares of CNX Resources ($CNX) jumped 11.4% after Bloomberg reported that EQT Corp. ($EQT) is pursuing a takeover of CNX and recently sent an acquisition proposal to its rival. Shares of EQT were 6.5% higher after the report.

MAJOR MOVERS: Among the noteworthy gainers was Gap ($GPS), which rose 13.7% after hosting a conference call unveiling its "Power Plan 2023" strategy. Also higher was Align Technology ($ALGN), which gained just under 35% after reporting quarterly results, and Clarus ($CLAR), which rose 3.6% after reporting preliminary Q3 revenue and after announcing an $85M convertible senior notes offering.

Among the notable losers was Kimberly-Clark ($KMB), which fell 6.9% after reporting quarterly results.

INDEXES: The Dow rose 152.84, or 0.54%, to 28,363.66, the Nasdaq gained 21.31, or 0.19%, to 11,506.01, and the S&P 500 advanced 17.93, or 0.52%, to 3,453.49.


Reviewing Thursday's economic data, which featured the weekly Initial and Continuing Claims report:

  • Initial claims for the week ending October 17 decreased by 55,000 to 787,000 (Briefing.com consensus 860,000) while continuing claims for the week ending October 10 decreased by 1.024 million to 8.373 million.
    • The key takeaway is that this is perhaps a better take on things, as California completed its pause in processing of initial claims and reported actual unemployment insurance claims; nonetheless, initial jobless claims remain at unacceptably high levels.
  • Existing home sales increased 9.4% m/m in September to a seasonally adjusted annual rate of 6.54 million (Briefing.com consensus 6.10 million), bolstered in part by a 34% annual increase in sales in vacation destination counties.
    • The key takeaway from the report is that it reflects robust demand for existing homes. That is constraining supply even further, which is going to be a pressure point that feeds higher prices, shuts out an increasing number of first-time buyers, and bolsters the prospects for new home sales.
  • The Conference Board's Leading Economic Index increased 0.7% m/m in September (Briefing.com consensus +0.6%) following an upwardly revised 1.4% increase (from 1.2%) in August.
    • The key takeaway from the report is that the strength among the leading indicators has become somewhat more widespread, although the slower pace versus August points to a possible slowdown in recovery momentum entering the fourth quarter.

  • Nasdaq Composite +28.2% YTD
  • S&P 500 +6.9% YTD
  • Dow Jones Industrial Average -0.6% YTD
  • Russell 2000 -2.3% YTD
Market Snapshot
Dow28363.60+152.84(0.54%)
Nasdaq11505.93+21.31(0.19%)
SP 5003453.49+17.93(0.52%)
10-yr Note -26/320.871
NYSEAdv 2072 Dec 919 Vol 844.4 mln
NasdaqAdv 2168 Dec 1262 Vol 3.6 bln

Industry Watch
Strong: Energy, Financials, Health Care, Utilities
Weak: Information Technology, Real Estate, Consumer Staples

Moving the Market

-- Market rebounds off lows after House Speaker Pelosi said a stimulus deal is "just about there"

-- Earnings reports mostly better than expected, weekly initial jobless claims were less than expected

-- Longer-dated Treasury yields increased for the sixth straight day


Source: (Briefing.com)(theFly.com)

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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