U.S. stock indexes saw modest losses gather steam early Friday, with the indexes trying to avoid a three-session weekly losing streak amid a slump in technology stocks.
The day’s trading action marks quadruple witching, which refers to the simultaneous expiration of single-stock options, single-stock futures, and stock-index options and stock-index futures, which has traditionally been associated with some intraday volatility.
How are equity benchmarks performing?
The Dow Jones Industrial Average DJIA, -0.29% was trading 90 points, or 0.3%, lower at 27,805, the S&P 500 index SPX, -0.06% was off 6 points, or 0.2%, at around 3,351, but swinging between slight gains and losses in early trade. The Nasdaq Composite Index COMP, +0.25% was trading at the break-even line at 10,908.
On Thursday, the Dow closed 130.40 points, or 0.4%, lower at 27,901.98, snapping a four-session win streak. The S&P 500 index fell 28.48 points to end at 3,357.01, a decline of 0.8%, following a momentary dip below its 50-day moving average at around 3,339. The Nasdaq Composite retreated 140.19 points, or 1.3%, to 10,910.28.
For the week, the Dow is on pace for a weekly gain of 0.5%, while the S&P 500 is aiming for a rise of 0.2% and the Nasdaq Composite was looking at a 0.4% weekly gain.
What’s driving the market?
Market participants are seeing somewhat listless trade early Friday as the U.S. equity benchmarks attempt to retain modest weekly gains headed into the weekend.
Wrangling by investors over the long-term impact of the Federal Reserve’s policy update on Wednesday, in which the central bank indicated that the economic recovery could be a long one, and that it wouldn’t be inclined to lift interest rates for at least another three or four years, is still rippling through the market.
However, investors continue to look for progress on fiscal stimulus talks from Washington lawmakers that is considered by many crucial to markets sustaining current gains and advancing further amid the economic wreckage created by the COVID-19 pandemic.
Reports indicate that Democrats and Republicans remain at an impasse over another round of coronavirus relief despite President Donald Trump’s urging for a deal to be struck soon. Lawmakers, however, planned to introduce a bill midday Friday that would see the government funded through mid-December.
House Democrats had passed a $3.5 trillion relief bill in May, but more recently in negotiations with White House officials said they would accept a $2.2 trillion deal, the Wall Street Journal reported.
House Speaker Nancy Pelosi said Democrats could push for more than their previous offer of $2.2 trillion but isn’t willing to advocate for anything less than her less proposal.
“When we go into a negotiation it’s about the allocation of the resources,” she was quoted as saying on Thursday by The Hill in a reporter briefing. “But it’s hard to see how we can go any lower when you only have greater needs.”
Meanwhile, the Fed is embarking on a second round of stress tests for the banking sector amid the coronavirus epidemic and is reportedly considering extending limits to dividend payments and share buybacks on the industry.
In economic reports, the U.S. current-account deficit, a measure of the nation’s debt to other countries, widened sharply in the second quarter. The current-account deficit widened to $170 billion from a revised $111.5 billion in the first quarter.
Looking ahead, investors are watching for a report on consumer sentiment that is due at 10 a.m. Eastern Time, while at the same time a speech by St. Louis Fed President James Bullard. Atlanta Fed President Raphael Bostic speaks at 12 p.m.
Which stocks are in focus?
- XL Fleet, a provider of electric vehicle technology, said Friday it has agreed to merge with Pivotal Investment Corporation II PIC, +16.58% , a special purpose acquisition corporation, or SPAC, in a deal with a pro forma enterprise value of about $1 billion. Shares of PIC were up 12%.
- Shares of Swiss-based Roche Holding AG ROG, +1.32% were in focus on Friday after the drug maker said hospitalized COVID-19 patients taking rheumatoid arthritis drug Actemra were less likely to need mechanical ventilation than those receiving placebo. U.S. listed Roche shares were p 1.2%.
- Shares of U.S. Steel Corp. X, +6.24% rose nearly 4% Friday, after the steel producer provided an upbeat third-quarter outlook, including a “significantly better” performance expected for its flat-rolled business and signs that the tubular business has bottomed.
- The U.S. Commerce Department said Friday it is prohibiting transactions involving Tencent’s 700, -0.38% WeChat and Bytedance’s TikTok. The order makes no mention of the Oracle ORCL, -0.34% deal with TikTok but said “the President has provided until November 12 for the national security concerns posed by TikTok to be resolved.” Shares of Oracle were little changed while Tencent shares were off 0.4%.
- Shares of Tesla Inc. TSLA, +5.41% were up 4.5% in early Friday trade.
How are other markets faring?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.675% fell 1.4 basis points to 0.67%, the day after the Fed’s decision. Bond prices move inversely to yields.
The ICE U.S. Dollar Index DXY, +0.00%, which tracks the performance of the greenback against its major rivals, was off 0.1% at 92.913.
Gold futures GCZ20, +0.13% headed 0.3% higher on Comex to $1,957.10 an ounce. Futures for the U.S. crude oil benchmark CL.1, +0.29% picked up 5 cents, or less than 0.1% to reach $41.02 a barrel as OPEC+ emphasized the importance of complying with output cuts during their monthly meeting on Thursday.
Stoxx Europe 600 index SXXP, -0.52% trades down 0.4%, and the U.K.’s benchmark FTSE 100 UKX, -0.64% headed 0.5% lower on Friday. In Asia, Hong Kong’s Hang Seng Index HSI, +0.47% closed 0.5% higher and the Shanghai Composite SHCOMP, +2.06% lost advanced 2.1%. Japan’s Nikkei NIK, +0.17% inched up 0.2%.