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End of Day Briefing - Recap of Tuesday Oct. 20, 2020

Stocks end higher as Pelosi says compromise stimulus bill being worked on

Stocks were slightly higher at midday as investors awaited word on whether Democrats and Republicans can broker a truce and enact more stimulus legislation ahead of the upcoming presidential election. House Speaker Nancy Pelosi sparked a bit of a further rally when she said in an interview with Bloomberg that a bill for a compromise stimulus package is being written. However, those gains were generally short-lived and the averages slipped back into a range as the market looked for more tangible evidence that a stimulus deal will be forthcoming.

ECONOMIC EVENTS: In the U.S., housing starts rose 1.9% to a 1.415M rate in September. Housing permits climbed 5.2% to a 1.553M rate, which is the highest since 2006.

Meanwhile, House Speaker Nancy Pelosi told Bloomberg in an interview ahead of a planned phone call with Treasury Secretary Steven Mnuchin that a bill for a compromise stimulus package is being written. More work is required to get a compromise, including assistance to state and local authorities and providing income assistance to working families, Pelosi added.

TOP NEWS: The U.S. Attorney General, along with eleven individual state Attorneys General, filed a legal action under Section 2 of the Sherman Act, accusing Alphabet's ($GOOGL) Google of "unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States through anticompetitive and exclusionary practices," as has been widely telegraphed by media reports. In response, Kent Walker, Google's SVP of Global Affairs, said in a blog post: " Today's lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to, not because they're forced to, or because they can't find alternatives. This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.

Shares of IBM ($IBM) fell 6.5% after the company's report last night of Q3 earnings and revenue. In other large-cap earnings news, Procter & Gamble ($PG) and Travelers ($TRV) shares rose 0.4% and 5.6%, respectively, following the companies' reports, while Philip Morris International ($PM) slid 5.8% following the company's quarterly update.

In M&A news, SK hynix announced an agreement to acquire Intel's ($INTC) NAND memory and storage business for $9B. Following receipt of approvals, SK hynix will acquire from Intel the NAND SSD business, including NAND SSD-associated IP and employees, as well as the Dalian facility, with a first payment of $7B. SK hynix will acquire from Intel remaining assets, including IP related to the manufacture and design of NAND flash wafers, R&D employees, and the Dalian fab workforce, upon a final closing, expected to occur in March 2025 with a remaining payment of $2B.

General Motors ($GM) shares rose 6.7% after the company announced that its Spring Hill, Tennessee assembly plant will begin the transition to become the company's third vehicle manufacturing site to produce electric vehicles. The news was part of GM reporting plans for six U.S. facility investments that total more than $2B.

Additionally, Ford ($F) shares rose 2% after CNBC reported that the car maker intends to launch its self-driving commercial business in 2022 with vehicles based on the Ford Escape Hybrid crossover.

Meanwhile, Reuters reported that AstraZeneca's ($AZN) COVID-19 vaccine trial in the United States is expected to resume as early as this week after the FDA completed its review of a serious illness.

MAJOR MOVERS: Among the noteworthy gainers was Corsair Gaming ($CRSR), which rose 14.5% after Wedbush analyst Michael Pachter initiated the stock with an Outperform rating and $25 price target, continuing Wall Street's rollout of coverage of the recent IPO. Also higher was Logitech ($LOGI), which gained 15.8% after reporting quarterly results.

Among the notable losers was AMC Entertainment ($AMC), which declined 12.7% after filing to sell 15M shares of common stock and providing downbeat Q3 revenue guidance. Also lower was Synchrony Financial ($SYF), which fell over 5% after reporting quarterly results.

INDEXES: The Dow rose 113.37, or 0.40%, to 28,308.79, the Nasdaq gained 37.61, or 0.33%, to 11,516.49, and the S&P 500 advanced 16.20, or 0.47%, to 3,443.12.

Reviewing Tuesday's economic data:

  • Total housing starts increased 1.9% m/m in September to a seasonally adjusted annual rate of 1.415 million units ( consensus 1.430 million). Total building permits jumped 5.2% m/m to 1.553 million ( consensus 1.510 million).
    • The key takeaway from the report is that there was robust growth in both single-unit starts (+8.5% m/m) and permits (+7.8% m/m), which reflects underlying strength in the market for single-family homes.

Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the Fed Beige Book for September on Wednesday.

  • Nasdaq Composite +28.4% YTD
  • S&P 500 +6.6% YTD
  • Dow Jones Industrial Average -0.8% YTD
  • Russell 2000 -3.0% YTD
Market Snapshot
SP 5003443.12+16.20(0.47%)
10-yr Note -2/320.796
NYSEAdv 2002 Dec 953 Vol 755.3 mln
NasdaqAdv 1835 Dec 1562 Vol 3.4 bln

Industry Watch
Strong: Financials, Energy, Communication Services
Weak: Consumer Staples

Moving the Market

-- Stocks edged higher ahead of stimulus update

-- Earnings reports were mostly better than expected

-- Energy and financial stocks outperformed amid higher oil prices, curve-steepening activity

Source: (

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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