4:05 pm: US equities close higher on stimulus package optimism
US stocks closed higher as House Speaker Nancy Pelosi indicated that Democrats and the White House were advancing their negotiations for a new coronavirus stimulus package before the November 3 election.
“Hopefully by the end of the day, we’ll know where we all are,” Pelosi told Bloomberg TV. “But I’m optimistic.”
On the day, the DJIA jumped 113 points, or 0.40%, to 28,308. The S&P 500 increased 0.47% to 3,443 and the tech-heavy Nasdaq rose 0.33% to 11,516.
12:15 pm: Markets recede slightly but remain solidly in the green
The Dow retreated from what was a 250-point gain in the opening hours of trading, but remained solidly in the green at noon ET. The index was up 205 points, 0.7%, to 28,401.2.
The Nasdaq gained 69 points, 0.6%, to 11,548.2, and the S&P 500 climbed 26 points, 0.8%, to 3,453.5.
Traders are closely monitoring the ongoing coronavirus talks between House Speaker Nancy Peloise and Treasury Secretary Steven Mnuchin, which could end in a deal as soon as today.
The two sides "continued to narrow their differences" in a phone call Monday afternoon, according to Pelosi's Deputy Chief of Staff Drew Hammill.
The Speaker and Secretary Mnuchin spoke at 3:00 p.m. today for approximately 53 minutes. In this call, they continued to narrow their differences. The Speaker has tasked committee chairs to reconcile differences with their GOP counterparts on key areas. (1/2)— Drew Hammill (@Drew_Hammill) October 19, 2020
The Speaker continues to hope that, by the end of the day Tuesday, we will have clarity on whether we will be able to pass a bill before the election. The two principals will speak again tomorrow and staff work will continue around the clock. (2/2)— Drew Hammill (@Drew_Hammill) October 19, 2020
On Sunday, Pelosi set a 48-hour deadline to get a deal done in order for it to take effect before the November 3 election.
10:30 am: Proactive North America headlines:
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9:45 am: Wall Street shares start higher
US indices started on the front foot on Tuesday as traders mulled new homes data, digested a slew of corporate earnings, and hoped a stimulus package could be signed-off by the end of the day.
The Dow Jones Industrial Average zipped up over 113 points at 28,308. The S&P 500 index advanced nearly 17 points at the open to 3,443.
The tech heavy Nasdaq index zoomed up over 60 points at 11,539.
Nancy Pelosi and Steve Mnuchin have indicated that differences in negotiations on a potential stimulus deal were "narrowing," as the self-imposed deadline is now the end of today.
According to latest data, construction starts on new homes came in at a seasonally-adjusted annual rate of 1.42 million in September, which was 1.9% higher than from the previous month’s downwardly-revised figure.
Economists had expected housing starts to occur at a pace of 1.45 million. Compared with last year, housing starts were up 11%.
In corporate news, among the biggest Dow gainers, Procter & Gamble (NYSE: PG) added 1.58% to US$144.24 in New York early deals as the consumer products tian earned US$1.63 per share in its latest quarter, beating consensus of $1.42 a share. The firm's revenue also beat forecasts.
8:15 am: US stocks poised for higher start
US stocks look set for a bounce-back in early trade on Tuesday as the clock continues to count down to tonight’s deadline for a coronavirus stimulus package to be agreed before next week’s election, and hope springs eternal again.
Wall Street caught a bout of nerves yesterday as there appeared no sign of Washington agreeing a pre-election package ahead of House leader Nancy Peolosi’s 48-hour deadline today. The Dow Jones Industrials Average dropped 410 points or 1.4% to 28,195.42, while the S&P 500 lost 1.6%, the Nasdaq Composite shed 1.7%.
But spread betting quotes for Tuesday suggest the US blue-chip index will storm 222 points higher to 28,417, with the S&P 500 tipped to jump 30 points to 3,457, and the Nasdaq Composite is seen rising 275 points to 11,754.
Corporate earnings will be a big focus, with tech giant IBM having reported after the close last night, and Netflix due around the same time today. Old school firms like Proctor & Gamble, Philip Morris and Lockheed Martin have also reported already today.
On the economic front, today will bring the latest US housing starts figures for September.
“With the sales of new homes having surged to a fourteen-year high and sentiment among home builders similarly making notable gains over recent months, today’s housing starts figures are expected to have posted another solid increase, with single-family starts possibly moving above the cyclical high reached last December,” said Daiwa Capital Markets.
Five things to watch on Tuesday:
- Household goods giant Proctor & Gamble has reported fiscal first-quarter earnings per share, which at US$1.63 were both higher than last year's US$1.36 and the consensus estimate of US$1.42.
- Tobacco products group Philip Morris also beat consensus forecasts of US$1.36 with its third-quarter earnings per share of US$1.42.
- Weapons maker Lockheed Martin has reported a better-than-expected third-quarter profit, helped by higher sales in its aeronautics unit which makes the F-35 fighter jet, and raised its full-year earnings forecast.
- AMC Entertainment Holdings Inc, the world’s largest theater chain, on Tuesday warned of a cash crunch and said it may have to go for in-court restructuring of liabilities if there are no sources of liquidity. It expects its cash resources to be largely exhausted by the end of this year or early 2021.
- Intel Corp has agreed to sell its NAND memory chip business to SK Hynix Inc for $9 billion in an all-cash deal that would propel the South Korean chipmaker to second in the global rankings.