Today’s Big Picture

Equities in Asia finished mostly higher today, capping off a positive week in full. Japan’s Nikkei traded off modestly today as did Hong Kong’s Hang Seng while China’s Shanghai Composite climbed 1.7% after reopening following the conclusion of the Golden Week holiday. Data from China’s Ministry of Culture and Tourism showed 637 million trips in China over the eight-day holiday, which generated revenue of $69.5 billion – now to wait and see what if any fall out there is on the COVID-19 front. 

By mid-day trading, European equities were mostly higher and U.S. futures point to a continuation of the week’s move higher for all of the U.S. equity indices. Spurring them on this morning is the continuation of what we can only call fiscal stimulus headline roulette as President Trump says he wants a “big deal” before the election that includes more comprehensive relief. With 24 days until the 2020 presidential election, barring a quick compromise between the two sides, the probability of a fiscal stimulus deal before the election looks increasingly less likely as each day ticks by. Weekend news-watching will be a must as any developments good or bad will set the tone for how global equity markets start next week.

Because a global pandemic, record-destroying fires in the west, and a few hurricanes already under the south’s belt this year just aren’t nearly enough for the joy that is 2020, Hurricane Delta has strengthened to a Category 3 as it churns toward storm-weary Louisiana. It is expected to make landfall as Category 2 or 3 late Friday, battering some of the same areas ravaged by Hurricane Laura.

Data Download

International Economy

August Household Spending in Japan fell 6.9% YoY, matching expectations for the month and compared to the 7.6% drop in July. On a sequential basis, August Household Spending missed the expected 3.2%, rising 1.7% for the month, which was significantly better than July’s 6.5% fall. Average cash earnings were down 1.3% YoY in August, an improvement from the prior month’s -1.5%.

The September Caixin Services PMI reading for China ticked up to 54.8 from 54.0 in August, marking a fifth straight month of growth. Despite that improvement, the softer manufacturing and industrial reading on China’s economy led the Caixin China General Composite PMI fell to 54.5 in September 2020 from 55.1 in August. 

The UK economy continues to improve but remains well below year-ago levels. Construction Output in the UK contracted 13% YoY, up from the prior 15.6% contraction in July. Industrial Production fell 6.4% YoY in August, again improving from the 7.4% contraction in July. Manufacturing Production contracted 8.4% YoY in August, an improvement from July’s 10.1% contraction. The 3-month average GDP as of August was an 8.0% expansion versus the prior 6.8% contraction. GDP YoY fell 9.3% in August, up from the 11.3% contraction in July.

Industrial Production in France rose 1.3% MoM in August, slowing from July’s 3.8% improvement.

Industrial Production in Italy rose 7.7% MoM in August, accelerating from July’s 7.0% improvement and was down just 0.3% YoY in August, up from July’s 8.3% YoY contraction.

Domestic Economy

The Census Bureau’s latest edition of the Household Pulse Survey found that nearly 60 million Americans expect someone in their household will lose a job or take a pay cut in the next four weeks. The survey also showed that ~32% of Americans found paying for typical household expenses to be “somewhat” or “very” difficult. 

Initial jobless claims yesterday fell slightly from the prior week, down to 840,000 (seasonally adjusted) from 849,000, and slightly higher than consensus estimates for 820,000. This markets the lowest level of the pandemic for initial claims but is an example of the overall trend of slowing improvement in the labor market. Continuing claims dropped to 10.98 million, below expectations for 11.5 million.

Shortly after the open U.S. equity markets, investors will receive Wholesale Inventories data for August. Later in the day, the latest World Agricultural Supply and Demand Estimates (WASDE) report will be out as will be Baker Hughes Rig Count data for this week. 


Despite a midday dip into the red, the Dow managed to close up 0.4% Thursday, at its highest level in over a month. The S&P rose 0.8%, with all 11 sectors in positive territory by the close, and the Nasdaq Composite 0.5%. All three indices have gained in 8 of the past 11 trading days. Yesterday the Energy sector rose 3.7%, making for its best 5-day run since July. What’s particularly interesting is that since the recent low for the S&P on September 23, the Utility sector has been the strongest, gaining 10.6% after being the second weakest sector from the bear market low on March 23 to September 23 – Energy was the weakest. The last time the Utility sector rose more than 10% in just 12 days was back in 2009.

The markets look to be more confident of a larger stimulus package as the odds of a Democratic win across the board are rising, based on recent polls, but officially Speaker Pelosi has made it clear that she has absolutely no interest in Trump’s package. 

Stocks to Watch

The Wall Street Journal reports Advanced Micro Devices (AMD) is in advanced talks to buy chip maker Xilinx (XLNX) in a deal that could be valued at more than $30 billion. Xilinx’s chips are used in wireless communications, data centers, and industries such as automotive and aerospace. 

Shares of Extreme Networks (EXTR) jumped in after-hours trading last night after the company reported preliminary quarterly results of $233-$236 million in revenue vs. the consensus view of $223.6 million, and non-GAAP EPS of $0.05-$0.08 vs. the $0.02 consensus.

Shares of NXP Semiconductors (NXPI) also moved higher in aftermarket trading last night following preliminary quarterly revenue of $2.2 billion vs. the $2 billion consensus. During the quarter, the company “experienced material improvement in demand across all end markets, but particularly in the Automotive and Mobile end markets.”

The U.S. Department of Defense selected AT&T (T)Nokia (NOK), Ericsson (ERIC)General Dynamics (GD)Booz Allen Hamilton (BAH), and others to take part in 5G testing at five military sites. Feature projects include piloting 5G-enabled augmented reality/virtual reality for mission planning and training; 5G-enabled Smart Warehouses, and evaluating 5G to enhance distributed command and control. 

Caesars Entertainment (CZR) has resumed gaming operations daily and hospitality operations for weekend stays at Planet Hollywood Resort & Casino today. 

IBM (IBM) and the Overwatch League announced its first-of-a-kind multi-year deal to bring IBM’s cloud computing and artificial intelligence (AI) technology to esports.

Business Insider reports that Microsoft’s (MSFT) gaming boss Phil Spencer told employees at an all-hands meeting the company is planning to bring Game Pass to Apple’s (AAPL) iPhone and iPad, targeting 2021 for the potential release of a “direct browser-based solution.” 

The London Stock Exchange (LSE) agreed to sell Milan’s Borsa Italiana stock exchange to Euronext, a part of the Intercontinental Exchange (ICE), for €4.3 billion.

Shares of Vontier Corporation (VNT) are slated to start trading on the New York Stock Exchange today after the completion of its separation from Fortive Corporation (FTV).

Democratic vice presidential nominee Kamala Harris said marijuana would be decriminalized at a federal level in the United States under a Biden administration. That revelation led shares of Tilray (TLRY)Canopy Growth (WEED:CN)Aphria Inc, (APHA:CN), and Aurora Cannabis (ACB:CN) higher. 

After today’s market close, there are no expected quarterly earnings reports. Investors looking to get a jump on the September quarter earnings season that kicks into gear next week should visit Nasdaq’s earnings calendar page

On the Horizon

    • October 13: NFIB Small Business, CPI, Real Hourly Earnings, Budget Statement
    • October 13-14: Amazon’s (AMZN) 2020 Prime Day event
    • October 14: MBA Mortgage Applications, PPI
    • October 15: Initial Jobless Claims, Bloomberg Comfort, Empire Manufacturing, Import/Export Prices, Philly Fed Outlook
    • October 16: Options Expiration Day, Retail Sales, Industrial Production, Business Inventories, University of Michigan Consumer Sentiment, TIC Flows
    • October 19: Home Builder Sentiment
    • October 20: Building Permits and Housing Starts
    • October 21: MBA Mortgage Applications, Fed Beige Book
    • October 22: Initial Jobless Claims, Bloomberg Comfort, Leading Index, Existing Home Sales, Kansas City Manufacturing
    • October 23: Preliminary Markit PMIs
    • October 26: Chicago Fed Activity, New Homes Sales, Dallas Fed Manufacturing Activity
    • October 27: Durable/Capital Goods, FHFA Home Prices, Case-Shiller Home Prices, Consumer Confidence, Richmond Fed Manufacturing
    • October 28: MBA Mortgage Applications, Wholesale Inventories, Retail Inventories
    • October 28: Facebook (FB), Google (GOOGL), and Twitter (TWTR) testify before the Senate Commerce Committee
    • October 29: Initial Jobless Claims, Bloomberg Comfort, GDP, Personal Consumption, Pending Home Sales
    • October 30: Personal Income, Personal Spending, PCE Deflator, Employment Cost, MNI Chicago PMI, University of Michigan
    • October 31: Boo!

Thought for the Day

“Happiness is a day called Friday.” ~Anonymous


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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