S&P first up day in 5, Powell says more stimulus needed, ‘FAANG is back’
September 23, 2020
Stocks snap losing streak
The market extended its gains in the final hour of trading to snap a multi-day losing streak for the three major indexes. The Dow rose 140 points, or 0.5%. The S&P 500 and Nasdaq Composite climbed 1.1% and 1.7%, respectively. — Jesse Pound
FDA reportedly to announce tough vaccine standard
The Food and Drug Administration is expected to release a tough guidance for an emergency authorization of a coronavirus vaccine that will make any vaccine distribution unlikely before the U.S. presidential election, The Washington Post reported on Tuesday. The announcement could come as soon as this week, the newspaper reported.— Yun Li
Amazon’s gains accelerate into the close
Shares of Amazon climbed higher throughout Tuesday’s trading session, with gains accelerating ahead of the close. The stock last traded about 5.15% higher at $3,111.65 per share. The gains were fueled by a broad rebound for stocks, as well as an upgrade to outperform at Bernstein. – Pippa Stevens
Final hour of trading: S&P 500 and Nasdaq set to snap 4-day losing streaks
The S&P 500 and Nasdaq Composite rose 0.7% and 1.1%, respectively, as Amazon shares led the major tech names higher. It would be the first time in five sessions that the two benchmarks posted daily gains. The Dow climbed 85 points, or 0.3%. —Fred Imbert
Fed’s Evans delivers eye-catching policy remarks
Chicago Federal Reserve President Charles Evans caught the market’s attention with various comments Tuesday about the future of monetary policy. For one, the central bank official said interest rates could rise ahead of inflation hitting the 2% target, though policy would still remain accommodative. He added that he doesn’t see the need for more aggressive quantitative easing than the current market-supportive bond-buying in which the Fed is engaged. And he called for more fiscal aid, without which he said the economy would slow and even tip into recession. OANDA senior market analyst Edward Moya labeled Evans’ comments to the Official Monetary and Financial Institutions Forum “hawkish” and said they “surprised many and provided a strong bid for the dollar across the board.” J.P. Morgan chief U.S. economist Michael Feroli wondered if the inflation view represented a new “Evans rule” that outlines the Fed leadership’s position on the new approach to the issue. The Fed last week codified its changing attitude on inflation in that it will allow for a run above 2% before raising rates. Evans’ remarks show “the degree to which Fed communications about the new framework and new guidance is a work in process,” Feroli wrote. — Jeff Cox
Dow gains 100 points
The Dow rose to a 100 point gain for the session as the market stretched higher. The S&P 500 and Nasdaq Composite extended their climbs for the day to 0.8% and 1.4%, respectively. The rally was still not particularly broad, however, with gainers barely outnumbering declining stocks in the S&P 500, according to FactSet. — Jesse Pound
Chase card spending ‘solid’ through mid-September, says JPMorgan
JPMorgan said Tuesday that chase card spending looks “solid” through the middle of September.
“Extracting a signal from high-frequency economic data has been challenging in the last few weeks, as many indicators strengthened around the Labor Day holiday only to weaken shortly afterwards,” the firm said. “As the dust from these possible seasonal distortions clears, however, our Chase card spending tracker appears to be on track for a solid monthly increase.”
Data shows that spending across the 30 million Chase credit and debit cardholders was down 5.8% year-over-year for the week ending Sept. 18, but spending is on track to register a “notable gain relative to August.” The firm added that there hasn’t been a dramatic decrease in spending since the extra unemployment benefits expired. – Pippa Stevens
Nikola CFO says ‘nothing has changed’ after Milton’s departure
Nikola’s chief financial officer Kim Brady assured investors that “nothing has changed” after founder and executive chairman Trevor Milton’s sudden departure.
“This is Trevor’s baby. He founded the company and he’s absolutely passionate, but it became increasingly clear that the attention was being focused on Trevor rather than on the company as well as the company’s mission,” Brady said during a virtual conference Tuesday hosted by Evercore ISI.
Milton’s resignation came 10 days after short-selling firm Hindenburg Research accused Nikola of making false statements about its technology in order to grow and secure partnerships with auto companies, including General Motors. Hindenburg said Nikola made “an Ocean of Lies.”
Shares of the electric truck maker rebounded about 4% Tuesday, but they are still down more than 15% this week.
“We are grateful to move forward,” Brady said. “Nothing has changed … We recommend that investors really focus on the future and what we have delivered and what we’re going to deliver.” — Yun Li
Lawmakers make push for more money to small businesses
Getting money into the hands of small businesses likely will be a job for Congress rather than the Federal Reserve, leaders of the two agencies said Tuesday. During a hearing before the House Financial Services Committee, Fed Chairman Jerome Powell said the central bank’s Main Street Lending Program, which targets small- and medium-sized businesses, is probably not the right vehicle for companies needing relatively low levels of financing. The program has loaned out only about $2 billion of its $600 billion capacity so far, even though the minimum loan size has been cut to $250,000. Rep. Maxine Waters (D-Calif.) asked Powell if it would help to cut the minimum level to $100,000. “There’s very limited demand in the facilities below $1 million,” Powell said at one point during a hearing in which the program was the topic of multiple questions. “I do think this is more appropriate for PPP loans. I think that the better way to approach this,” he added, referring to the Paycheck Protection Program. Treasury Secretary Steven Mnuchin said the administration would be willing to redirect funds allocated to the Fed to the PPP and more direct financing. “We would like to spend that money on other areas of the economy that could be better served — kids, jobs, more PPP, [Small Business Administration], long-term loans that unfortunately we do need congressional authority to use it in other areas,” Mnuchin said. “We do have a lot of money left over in the PPP that’s been appropriated by Congress that with simple legislation would allow many hard-working small businesses to get a loan.” — Jeff Cox
Powell doubles down on need for more Covid stimulus: Fiscal action underlies ‘many’ forecasts
Federal Reserve Chairman Jerome Powell on Tuesday reiterated to lawmakers that the U.S. economy could begin to decelerate in the months ahead without further fiscal stimulus from Congress.
Though Powell was clear to say that economic growth is in the middle of a rebound, he added that there are risks to employment and GDP growth if lawmakers can’t agree on an additional relief package.
“I would say many, most, [forecasters] assume some fiscal action,” Powell told the House Financial Services Committee. “Fiscal action underlies many, many current forecasts.”
“What’s happened lately is the economy has proved resilient both to the broader spread of the disease over the summer in some of the southwestern states and also to the expiration of the Cares Act benefits,” the Fed chief continued. “The risk is that, over time, they go through those savings, they haven’t been able to find employment yet because it’s going to take a while to get 11 million people back to worth, so their spending will decline. Their ability to stay in their homes will decline. So, the economy will begin to feel those negative effects at some time.” — Thomas Franck
Stocks making the biggest moves midday
Shares of Amazon popped 3% after Bernstein upgraded the e-commerce giant to outperform from market perform. The Wall Street firm said the recent pullback created an attractive “entry point” into the stock.
Shares of online marketplace for used cars Carvana surged nearly 30% after announcing that it expected record results across several metrics for its third quarter, including total revenue and retail unit sales.
Shares of electric car maker Tesla fell about 6% ahead of the company’s annual meeting of stockholders and Battery Day presentation.
Read more about midday movers here. — Maggie Fitzgerald
Markets at midday: S&P 500 tries to snap 4-day slide
The S&P 500 traded 0.2% higher around midday as the broader-market index tried to log its first positive day in five. The Nasdaq Composite also gained 0.3% as Amazon shares advanced 3%. The Dow struggled, falling 51 points, or 0.2%. —Fred Imbert
JPMorgan upgrades Carvana
JPMorgan upgraded Carvana to overweight from neutral and raised its price target on the stock after the company’s business update on Tuesday morning. JPMorgan said in a note that the “surprise acceleration in profitability shifts thesis towards our bull case.” Carvana’s stock has now gained 29% for the session, bringing it within 5% of the bank’s new $235 per share price target. — Jesse Pound
Cramer says ‘FAANG is back’
Barry Diller: ‘Every nickel you can, keep it’
Businessman Barry Diller on Tuesday called the stock market a “great speculation” and urged everyone to save their cash. “Personally, and professionally, every nickel you can, keep it … wherever it’s banked,” the billionaire chairman of both Expedia and digital media group IAC said in an interview on CNBC’s “Squawk Box.” Diller is far from the first to express skepticism about the stock market’s powerful recovery from its coronavirus March 23 lows. However, that rebound on Wall Street has hit a rough patch in September. — Kevin Stankiewicz
Here are Tuesday’s biggest analyst calls of the day: Amazon, Square, PayPal, Teladoc & more
DA Davidson initiated Teladoc as buy.
KBW upgraded Allstate to outperform from market perform.
Bernstein upgraded Amazon to outperform from market perform.
Loop initiated Square and PayPal as buy.
Goldman Sachs upgraded Carvana to buy from neutral.
Pro Subscribers can read more here. – Michael Bloom
Existing home sales hit 14-year high
Existing home sales jumped 2.4% in August to a seasonally adjusted annualized rate of 6 million units, according to the National Association of Realtors. The figure represents a 10.5% year-over-year jump, and is the highest sales pace since December 2006. – Diana Olick, Pippa Stevens
Tech caught in tug-of-war after investors bought the dip at opening
A tech stock rally could overpower the market’s bearish mood, but it looks like the sector is caught in a tug-of-war between dip buyers and selling pressure.
Technicians expected technology and other favorites to attempt a turnaround Tuesday, and they were encouraged as tech turned positive late Monday. Apple, Amazon and other favorites have been at the heart of the September sell-off, but on Monday selling centered on cyclical names and they were the hardest hit. Tech was the only major sector to end higher, up 0.76% Monday.
In early trading Tuesday, the Nasdaq opened higher but gave up its best gains. The Nasdaq was up 0.6% at 10,841 in the 10 a.m. hour, after earlier reaching 10,879. Microsoft and Apple were higher but gave up some gains. Stocks like Netflix and Tesla were off highs, and were trading with losses on the day.
Robert Sluymer, Fundstrat technical analyst, said technology and FANG stocks showed signs of being short-term oversold and were set to bounce. But he didn’t expect the bounce to be long lasting and expects a choppy and volatile market, which should find a bottom in October.
“I think it’s going to be more of a seesaw pattern, where you get a relief rally from oversold levels,” said Sluymer. He expects to see an “ebb and flow” between cyclicals and tech.–Patti Domm
Stocks open in the green, led by technology
Stocks opened in the green on Tuesday, attempting to make back some of its losses from the previous four negative sessions. Technology stocks helped lift the S&P 500, which rose 0.47% at the open. The Dow Jones Industrial Average popped about 30 points. The Nasdaq Composite rose 0.82%. —Maggie Fitzgerald
Carvana shares soar after business update
Online used car marketplace Carvana said Tuesday that it expects to set records in several categories for the third quarter, and its stock jumped 24% in premarket trading. The company also received an upgrade to buy from hold from Goldman Sachs, though the premarket surge has already sent the stock past Goldman’s new price target. The stock has now risen more than 100% so far this year. — Jesse Pound
Apple could add sentiment boost if holds 50-day
Traders are looking to Apple again today to give a boost of confidence to the turbulent stock market.
After falling into bear market territory Friday, Apple’s turnaround Monday gave out some hope that the stock may not sink into a worse downtrend and there could be a broader tech and market turnaround Tuesday. The stock held its own most of the day Monday during the worst selling, and it rose into the last hour to gain 3% on the day. That contributed to the reversal of some market losses.
This morning Apple was higher but off its highs after U.K. Prime Minister Boris Johnson announced new virus restrictions. Apple fell below its 50-day moving average on Friday. The 50-day is just above $110.71.
Apple entered its own bear market when it fell 20% below its last closing high of $134.18 from Sept. 1. According to Bespoke, Apple entered its 17th bear market since 2001. According to Bespoke, Apple bear markets have lasted an average 112 days and the stock has lost an average 33%.
Apple’s ability to hold onto the 50-day moving average could be key. It’s a widely watched momentum indicator.
“If the stock doesn’t manage to bounce back above its 50-DMA by the end of this week, we think it’s safe to say that its uptrend will have been broken,” according to Bespoke. –Patti Domm
Boris Johnson announces further restrictions as UK cases rise
U.K. Prime Minister Boris Johnson announced Tuesday a tightening of economic restrictions and public health measures to slow the spread of Covid-19. Johnson said that the country was at a “perilous turning point” and ordered bars and restaurants to close between 10 p.m. and 5 a.m., according to the Associated Press. Other restrictions include expanding the list of places where masks are required and lowering the maximum amount of people allowed for group events. Johnson said the restrictions could be in place for six months, Reuters reported. — Jesse Pound
Dow futures roll over
Dow futures rolled over around 8 a.m. ET amid concerns about an uptick in coronavirus cases and restriction, especially in the U.K. Dow futures dropped more than 100 points, after being up about 10 points earlier Tuesday morning.
S&P 500 futures dipped 0.15% and Nasdaq 100 futures rose 0.19% thanks to a rebound in technology stocks that started Monday afternoon. — Maggie Fitzgerald
DOJ could file antitrust lawsuit against Google next week, Washington Post reports
The Washington Post reported late Monday night that the U.S. Justice Department could file an antitrust lawsuit against Google next week. The report also said, citing sources familiar with the matter, that the White House plans on speaking with Republican attorneys general about a law preventing social media platforms from being held liable for content posted by users. The report comes a year after the department launched an investigation into Google’s advertising practices. Google-parent Alphabet shares were up 0.7% in the premarket. —Fred Imbert
Tesla slips ahead of ‘Battery Day’
Shares of Tesla slid more than 4% during premarket trading on Tuesday after Elon Musk dampened expectations for the company’s long-awaited Battery Day. On Monday night Musk took to twitter to say that the announcements made “will not reach serious high-volume production until 2022.”
Analysts are expecting the company to announce details about a new type of battery cell at the event later on Tuesday. – Pippa Stevens, Ryan Browne
The strength of tech stocks that emerged on Monday afternoon, muting the broader market’s losses, continued in premarket trading on Tuesday. Futures for the Nasdaq 100 rose 0.6%, while shares of Apple gained 1.5%. The consumer tech stock finished 3% higher on Monday after opening the session in the red. — Jesse Pound
Powell promises Fed help and notes economic improvement
Federal Reserve Chairman Jerome Powell is touring Capitol Hill this week with a pledge to provide monetary policy help “for as long as it takes.” The central bank chief’s first stop comes Tuesday with an appearance before the House Financial Services committee. Along with Treasury Secretary Stephen Mnuchin, Powell will outline what has been done so far to help the economy through the coronavirus pandemic, and will take questions from legislators. The last time the duo appeared before Congress, the questions were mostly amicable. In prepared remarks Powell released, he noted that “economic activity has picked up” though the “path ahead continues to be highly uncertain.” He speaks to another House panel Wednesday and then to the Senate Banking Committee on Thursday. — Jeff Cox
Amazon upgraded to outperform at Bernstein
Shares of Amazon advanced more than 2% during premarket trading on Tuesday after Bernstein upgraded the stock to an outperform rating, saying the recent pullback presents a compelling buying opportunity.
“The stock has sold off 16% in the last couple of weeks, creating an attractive entry point,” the firm said in a note to clients Tuesday. “All signs point to Amazon growing from a new level, increasing fulfillment capacity by 50% Y/Y this year through 100+ new facilities and plans to hire an additional 100K workers.”
Shares are down 14% this month, but have still registered a 60% gain this year.
CNBC PRO subscribers can read more on the upgrade here. – Pippa Stevens
Futures rise, stocks attempt to snap 4-day losing streak
Stock futures rose on Tuesday, attempting to earn back some of the sharp losses from the last four sessions. Dow futures jumped 9 points. S&P 500 futures gained 0.25% and Nasdaq 100 futures rose 0.7%.
On Monday, the Dow Jones Industrial Average dropped 510 points. The S&P 500 and Nasdaq Composite lost 1.16% and 0.13%, respectively. Stocks, however, closed above their session lows thanks to a late day comeback in technology stocks. — Maggie Fitzgerald