US stocks close down on uncertain fate for coronavirus stimulus deal and spiking COVID-19 infections across Europe

The Labor Department said there were 898,000 first-time filers of jobless benefits in the prior week, higher than an estimate of 830,000.

Morgan Stanley - Wall Street to open mostly lower as stimulus hopes fade

4:05 pm: US equities fall for third-straight day

US stocks closed down for a third-straight day on an uncertain fate for a coronavirus stimulus deal and spiking COVID-19 infections across Europe. 

Treasury Secretary Steven Mnuchin has dampened expectations for an aid package being reached before the presidential election.

Meanwhile, France has declared a public health state of emergency and the UK is nearing a second national lockdown.

On the day, the Dow Jones Industrial Average declined 19.8 points, or 0.07%, to 28,494. The S&P 500 dropped 0.15% to 3,483 and the tech-heavy Nasdaq lost 0.47% to 11,713.

12pm: FTSE 100 closes down and US stocks lagging

FTSE 100 closed in the red as global stock markets were clobbered on renewed pandemic concerns and London was placed on a tier 2 lockdown.

The UK benchmark of leading shares finished the day down over 120 points, or 1.73%, at 5, 832. FTSE 250 also tracked lower, losing almost 112 points, or 0.62% at 17,838.

"Market sentiment continues to sour as a London lockdown poured fuel to the fire for Coronavirus concerns. The recent European underperformance established through a sharp surge in daily Covid deaths remains in play, with FTSE 100 declines double that seen in the Dow," noted Joshua Mahony, senior market analyst at IG.

Meanwhile, David Madden, at CMC Markets, added: "The rising number of new Covid-19 cases has alarmed governments, which has prompted them to introduce tighter localised restrictions. Dealers are in risk-off mode because they fear that economies will suffer in terms of economic activity.

"The eurozone’s economic recovery was already cooling before the recent spike in cases and the introduction of stricter restrictions."

In London, hospitality, transport, travel, house building and commodity stocks all took a bath.

US and Canada 11.30am

US benchmarks were trailing in early deals in New York. The Dow Jones Industrial Average plunged over 116 points at 28,397. The S&P 500 shed almost 22 at 3,466. The tech-laden Nasdaq exchange lost over 110 at 11,658. Up in Toronto, the TSX index was down around 69 points at 16,386.

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9:42am: US indices start lower

Despite expectations of a more mixed open, the main indices on Wall Street all turned lower on Thursday morning as stagnant stimulus talks and a worse than expected number of jobless claims took a toll on market sentiment.

Shortly after the opening bell, the Dow Jones Industrial Average was down 0.9% at 28,245 while the S&P 500 dropped 1.1% to 3,450 and the Nasdaq fell 1.3% to 11,615.

Another factor that may have wiped away any residual positivity in the latest batch of US jobless claims, which showed that 898,000 Americans filed for unemployment benefits in the week to October 10, higher than the 845,000 figure from the prior week and well above predictions of 825,000, indicating that any economic recovery may be losing steam.

Overall, the figures mean the US economy is still over 10 million jobs short of recovering the 22 million that were lost during the initial stages of the pandemic earlier this year.

7.57am: Wall Street to open mostly lower

Wall Street is heading for a mostly lower open on Thursday, with the Nasdaq once again bucking the trend with expectations of a higher start.

The tech-heavy index is looking to open 50 points higher at 11,819 but the Dow Jones Industrial Average is tipped to tumble 252 points to 28,262 and the S&P 500 is slated to slump 34 points to 3,455.

The talks on a fiscal stimulus for the US economy have not been going on anywhere near as long as the Brexit negotiations between the UK and the EU but they seem to be making progress at the same sclerotic pace and that has hit sentiment in equity markets.

“After months of talks, the Democrats and Republicans still can't agree on a critical support package that could make life very hard for businesses and households in the coming months. [US Treasury Secretary] Steve Mnuchin's admission that a package is unlikely before the election was a blow to the markets, one they're struggling to pick themselves up from,” said OANDA’s Craig Erlam.

“Of course, no stimulus before the election doesn't mean none at all, in fact, it could be much larger if, as polls suggest, Democrats enjoy a clean sweep in the election but a lot of damage - some irreversible - could occur in the interim, it's far from a desirable outcome,” he added.

The third-quarter earnings season is also now in full-flow, which may provide some cheer for traders keen to invest in equities.

Five things to watch for on Thursday:

  • Share price reaction from Morgan Stanley (NYSE:MS) as the investment bank reported third quarter earnings and revenues that were ahead of forecasts
  • Also in the spotlight will be Walgreens Boots Alliance Inc (NASDAQ:WBA) after the pharmacy group reported a profit fall that was less bad than predicted, while revenues had increased ahead of expectations
  • Meanwhile, investors may also be looking to shares in Tesla Inc (NASDAQ:TSLA) after Elon Musk announced the firm was cutting the price of its flagship Model S to US$69,420, ostensibly as a joke but perhaps also to undercut rival electric car maker Lucid Motor’s new Lucid Air model, priced at around US$77,400 which falls to US$69,900 upon receipt of a tax credit
  • A scandal at banking giant Wells Fargo & Co (NYSE:WFC) could affect the firm’s share price after it unveiled that it has fired more than 100 employees for allegedly defrauding the US government’s pandemic relief program
  • Macro data will also be in focus with jobless claims data for the week to October 10 predicting that 825,000 Americans will have filed for unemployment benefits over the period compared to 845,000 in the previous week

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