Market Snapshot: U.S. stocks bounce back and forth as earnings reports roll in, investors wait for stimulus news

Stock index benchmarks were bouncing between small gains and losses Wednesday as investors monitored long-running fiscal stimulus talks in Washington and sifted through a stack of corporate earnings reports, including disappointing results from pandemic highflier Netflix Inc. Read More...

Netflix earnings in focus.

Lionel Bonaventure/Agence France-Presse/Getty Images

What are major benchmarks doing?

The Dow Jones Industrial Average DJIA, -0.13% was up 8 points to 28,317, while the S&P 500 SPX, -0.03% was up 6 points, 0.2%, near 3,449. The Nasdaq Composite COMP, -0.11% was up 26 points or 0.2%, at about 11,542.

The Dow on Tuesday rose 113.37 points, or 0.4%, to finish at 28,308.79, after rising as high as 28,575.03 earlier. The S&P 500 added 16.20 points to end at 3,443.12, a gain of 0.5%, while the Nasdaq Composite advanced 37.61 points or 0.3%, to 11,516.49.

What’s driving the market?

Talks between House Speaker Nancy Pelosi, D-California, and U.S. Treasury Secretary Steve Mnuchin were set to continue on Wednesday on another fiscal stimulus package. The Republican-controlled Senate remains a potential sticking point though with Majority Leader Mitch McConnell, R-Ky., reportedly still reluctant to take up a large spending proposal.

Stocks were buoyed Tuesday as talks continued, with Pelosi waving off her self-imposed Tuesday deadline for a pre-election deal.

“The markets are so focused on the election, but this is what’s driving the day-to-day,” said Keith Lerner, chief market strategist for Truist/SunTrust Advisory Services, in an interview . “Often the market is what puts pressure on Congress to act. But the markets have been steady and the economic data has been steady. The best thing for the market is that expectations have come back down. If we don’t get anything I think we’ll have a minor hiccup, but if we do get something we may get some upside. I don’t think it’s fatal to the economy to wait until after the election.”

Lerner expects the final weeks before the election to be “a sloppy trade with a lot of back and forth and not a lot of movement.” He sees it as a good opportunity to buy on any dips, and possibly to start rotating toward cyclical sectors like industrials XLI, -0.43% and materials. XLB, +0.15%

In contrast, Charalambos Pissouros, senior market analyst at JFD Group, said in a Wednesday note that investors should continue to take developments day by day, warning that the continued rapid spread of COVID-19 could threaten the global economy if it forces further lockdowns of business activity. Investors might also be wary of increasing long positions in equities as the Nov. 3 U.S. presidential election draws near, he said.

Read: Why stock-market investors are beginning to focus on Biden’s narrowing lead over Trump

The U.S. corporate earnings reporting season remains in full swing also. Among the most closely watched names, results from Netflix Inc. NFLX, -6.78% disappointed investors after Tuesday’s closing bell, reflecting a slowdown in new subscribers and a wide miss on earnings. Shares in the video streaming giant were down more than 5% in early trade after rising more than 60% in the year to date as pandemic lockdowns fueled demand.

Several Federal Reserve officials will speak Wednesday. Gov. Lael Brainard, in remarks to the Society of Professional Economists in the U.K. said the U.S. would be in for “a slower and weaker recovery” if Congress failed to pass another aid package.

Later, Cleveland Fed President Loretta Mester will discuss the economic outlook at a conference in the U.K. at 10 a.m. Eastern, while Minneapolis Fed President Neel Kashkari is set to talk about education at a Minnesota event at noon. Dallas Fed President Robert Kaplan is set to deliver a speech in Houston at noon Eastern.

The Fed’s Beige Book, a compilation of economic anecdotes, is scheduled for releaset 2 p.m. Eastern.

Which companies are in focus?

Shares of social-media company Snap Inc. SNAP, +34.49% were up 35midday after the company smashed expectations for revenue and user growth while posting a surprise adjusted profit.
Autonation Inc. AN, +4.37% blew away earnings estimates. Shares were nearly 5% higher.
Abbot Laboratories ABT, -1.87% on Wednesday reported earnings that topped forecasts, and offered rosy full-year guidance. But shares slipped 2.5%.
Shares of Verizon Communications Inc. VZ, -0.59% were bouncing between small gains and losses after beating on earnings, but missing on revenue. The telecom company raised its outlook.
Shares of Biogen Inc. BIIB, -1.10% fell 0.9% after the pharmaceutical company missed Wall Street estimates for earnings.

How are other markets trading?

In global equities, the Shanghai Composite SHCOMP, -0.09% closed down 0.1%, while Hong Kong’s Hang Seng Index HSI, +0.75% gained 0.8% and Japan’s Nikkei 225 Index NIK, +0.30% advanced 0.3%. The pan-European Stoxx 600 Europe SXXP, -1.29% was off 1.3%, while London’s FTSE 100 UKX, -1.91% slid 1.5%.

Oil futures were lower in early trade, with the U.S. benchmark CL00, -3.40% down $1.363, or 3.3%, to $40.37 a barrel. Gold futures GCZ20, +0.82%, were up $14 or 0.7%, to $1,929.40 an ounce.

The ICE U.S. Dollar Index DXY, -0.56% , a measure of the currency against a basket of six major rivals, was down 0.5%.

The yield on the 10-year Treasury note TMUBMUSD10Y, 0.805% was up 2 basis points to 0.805%, near its highest since June on stimulus hopes. Yields and bond prices move in opposite directions.