Stocks sink on vaccine and stimulus concerns

The US stock market finished in the red on Wednesday. Healthcare and consumer stocks were among the worth performers.

Time is running out for a stimulus deal before the election, which is a mere 20 days away. Treasury Secretary Steven Mnuchin said Democrats and Republicans “still remain far apart” on some issues during a virtual interview at the Milken Institute’s Global Conference.

Another week, another jobless claims report.

And just like in recent weeks, we’re expecting a very modest improvement from the previous report. Economists polled by Refinitiv think 825,000 Americans filed for first-time unemployment benefits last week. That would be 15,000 fewer claims than the week before.

Sure, that’s an improvement. But if that’s the pace we’re at, it’s going to take a long time to get back to pre-pandemic claims levels around 200,000.

Continued jobless claims, which count workers who have filed for benefits for more than two weeks in a row, are expected at 10.7 million – compared to just below 11 million in the last report.

But economists are worried that one reason continued claims are declining could be that people have maxed out their benefit allowance (up to 26 weeks of aid) and are instead moving onto other government aid programs. One such program is the Pandemic Emergency Unemployment Compensation, which provides aid for another 13 weeks.

So if claims numbers go down for the wrong reasons, it would be a bad sign.

University life and learning has changed massively in the Covid-19 pandemic. Online learning platform Coursera is aiming to fill that gap.

Just before the pandemic, the company launched Coursera for Campus, offering more than 4,000 courses. Now the company will offer a long-term free version of Coursera for Campus called ‘The Basic Plan’, Jeff Maggioncalda, CEO of online learning platform Coursera, told Alison Kosik on the CNN Business digital live show Markets Now.

The Basic Plan provides free access to more than 3,600 online courses.

“We were pretty lucky. We have some of the leading universities as partners,” Maggioncalda said.

Wall Street Veteran Mario Gabelli, chairman of Gabelli Funds is confident we will ultimately get a vaccine against Covid-19.

“We assume that a vaccine will come,” he said on the CNN Business digital live show Markets Now.

The 2021 economy could include strong positive revenues for companies in the S&P 500, even though gross margins will narrow and tax rates will go up, Gabelli said.

“There are sectors that we think will be vibrant for 2021 and 2022,” Gabelli added, such as autos and infrastructure, as well as environmental businesses.

No matter who wins the US presidential election in less than three weeks, the winner will have their work cut out for them, said S&P Global US chief economist Beth Ann Bovino.

Jobs will be the main issue, Bovino said during an S&P event previewing a forthcoming report comparing the candidates’ economic policies.

As of September, America was still down 10.7 million jobs compared to February.

Even though the rebound has so far been stronger than expected, S&P’s economists expect a slow recovery going forward.

It will take time to getting everyone back to work who lost their jobs thanks to the pandemic.

Stocks are now in the red across the board after starting the session modestly higher.

The Dow is 0.5%, or 137 points, lower, while the broader S&P 500 is down 0.6%.

The Nasdaq Composite is down 0.8%.

Investors are weighing surprisingly strong earnings from JPMorgan and Goldman Sachs, with less-than-stellar financial reports from Bank of America and Wells Fargo.

Also, two Covid-19 vaccine trials were halted because of safety concerns. And hopes for a stimulus deal seem to fade every day that passes before the election.

President Donald Trump, speaking during his web appearance before the Economic Club of New York, said he wants to turn America into No. 1 manufacturing power in the world.

Well, that’s a bit awkward because looking at manufacturing employment alone, the sector has been in secular decline for some 40 years. Employment in the sector was at its highest in 1979, with 19.6 million jobs. Since then, they have more or less steadily declined. One reason for that is automation and robots taking over human jobs.

Manufacturing was hit very hard during the Great Recession starting in 2008, and sector jobs are still not back to where they were in 2007. That’s in part why we’ve seen rather steady job growth in the sector over the past decade — until Covid hit. It’s a cycle within a cycle.

But there’s yet another layer: In the second half of 2019, America’s factories fell into a downturn, driven by weaker global demand on the back of the trade war between the United States and China. They emerged at the start of this year, just in time for the pandemic to hit and put a damper on everything.

Read more about America’s manufacturing cycle here.

President Donald Trump once again took aim at the recovery from the Great Recession that happened under the Obama administration versus how he’s handling the pandemic recession.

First, some context: The current recession has caused the biggest loss of jobs ever on record, with more than 22 million jobs vanishing during the spring lockdown. Since then, about half of those lost jobs have resurfaced as the economy reopened. But as of September, the US economy was still down 10.7 million jobs compared to February.

Meanwhile, under Obama, fewer than 9 million jobs were lost between January 2008 and February 2010 – the peak and trough for employment – following the financial crisis.

With the election less than three weeks away, President Donald Trump said today that Americans must choose between prosperity and a steep depression

“Simply put, it’s a choice between a socialist nightmare and the American dream,” Trump said during a webinar appearance before the Economic Club of New York.

After ECNY officer Mike O’Neill invited Trump to present his economic agenda for the next four years, citing a list of the president’s economic achievements during his time in office, Trump opened with, “I have nothing to say. I think I can leave right now.”

The US economy is recovering from the pandemic recession. But the pace of the recovery has been slowing down since the initial improvements in the summer. The country has a long and hard way to go.

This sentiment was echoed by Federal Reserve Vice Chairman Richard Clarida today.

“The Covid-19 recession threw the economy into a very deep hole, and it will take some time, perhaps another year, for the level of GDP to fully recover to its previous 2019 peak,” Clarida said in prepared remarks delivered at the 2020 annual membership meeting of the Institute of International Finance.

After the financial crisis, it took more than eight years for employment and inflation to go back to the Fed’s preferred levels, he said.

“It will take some time to return to the levels of economic activity and employment that prevailed at the business cycle peak in February, and additional support from monetary—and likely fiscal—policy will be needed.”

The call for more government stimulus has been a big thing for the Fed in the past months. Last week, Fed Chairman Jerome Powell made another such call just hours before President Donald Trump ended stimulus negotiations between Democrats and Republicans until after the election.

US stocks climbed higher at Wednesday’s opening bell, reversing Tuesday’s losses.

Earnings season is now in full swing with a mixed picture from America’s banks. Meanwhile, producer price inflation came in hotter than expected.

Investors will keep an eye on President Donald Trump, who is scheduled to address the Economic Club of New York in a webinar at 11 am this morning.

Following yesterday’s increase in consumer price inflation, producer prices also rose in September, the Bureau of Labor Statistics reported.

Producer prices climbed 0.4% in September, more than economists had expected and slightly more than in August. It was the third-straight month of price increases for producers.

Demand for services – and specifically prices for traveler accommodation services, which jumped 3.9% – was the biggest driver behind the price increase.

Stripping out the more volatile items like food, energy and trade services, prices rose 0.4%, the largest increase since April 2019.

Looking at the longer term, the price increase was even more substantial: over the past 12 months ended September, prices climbed 0.4%, the first increase since March.

Restaurant Brands International (QSR) just released its preliminary third quarter results, which shows that Popeye’s sales are soaring while Burger King and Tim Horton’s aren’t.

Here’s what global same-store sales are for the three months ending September 30:

Popeye’s has had strong sales since rolling out its popular chicken sandwich last year.

Bank of America (BAC) also reported earnings this morning but missed analysts’ revenue expectations.

The bank’s sales of $20.3 billion, were 11% below last year’s third quarter revenue.

The company’s shares fell more than 2% in premarket trading.

Its net profits totaled $4.9 billion, down nearly 16% from the same period last year.

All business units aside from global markets brought in less revenue and net profit in the third quarter.

Dave & Buster’s (PLAY) said in a business update that same-store sales are “steadily” improving, although they’re still pretty brutal.

Approximately 70% of its outlets have reopened following closures because of Covid-19.

Shares rose more than 2% in premarket trading.

People walk by the Goldman Sachs headquarters in New York on April 11.

Investment banking giant Goldman Sachs reported impressive third-quarter results Wednesday morning. Earnings and revenue easily topped Wall Street’s forecasts. Shares of Goldman Sachs (GS) rose 3% on the news.

Goldman Sachs has benefited from the explosive rebound in the stock market since March. Revenue for its trading unit rose solidly and Goldman Sachs also generated solid gains in sales from its asset management business as well as a healthy jump in stock underwriting fees thanks to the boom for initial public offerings.

CEO David Solomon acknowledged in a press release that we’re will in “a very uncertain environment” due to Covid-19 but added that “as our clients begin to emerge from the tough economy brought on by the pandemic, we are well positioned to help them recover and grow, particularly given market share gains we’ve achieved this year.”

Goldman Sachs is also growing more hopeful that the economy will rebound next year even as many experts worry that a more tepid recovery is in store. The company said in a slide presentation that it expects the US economy to grow 5.8% in 2021 following a 3.4% contraction this year.

Goldman Sachs is the latest big financial firm to report its third quarter numbers, following strong earnings from JPMorgan Chase (JPM) and BlackRock (BLK) and mixed results from Citigroup (C) and Bank of America (BAC).

A person walks past a Bed Bath & Beyond store in New York City on September 24.

Bed Bath & Beyond is selling its Christmas Tree Shops unit, its institutional Linen Holdings business, and a distribution center located in Florence, New Jersey.

The sales will raise $240 million. The company brought in a new CEO in January and announced a plans to restructure in February, just before the Covid-19 pandemic shook the retail industry.

Among its turnaround efforts are plans announced in July to close about 200 stores – mostly Bed Bath & Beyond brand locations– over the next two years. At least 63 of the stores will close by the end of the year. Most of the stores were money-losing locations. It also cut 2,800 jobs in August, about 5% of its workforce.

The company recently reported a profitable second fiscal quarter with net income of $218 million, compared to a net loss of $139 million in the year-earlier period.

Shares of Bed Bath & Beyond were little changed following the after-hours announcement Tuesday.

An E-Trade survey of “experienced investors” think that President Donald Trump winning next month’s presidential election over Joe Biden would be better for the markets — but barely.

The results show an almost even divide with 50% investors thinking a Trump victory is better for markets compared to 44%, while 6% said neither. 

That’s a slightly different point of view from Goldman Sachs (GS), which said in a recent report that a “blue wave would likely prompt us to upgrade our forecasts” and be good for the markets.

It’s true that if Democrats sweep into power early next year, it would likely translate to higher taxes and regulation. Such a reversal from the Trump agenda could eat into corporate profits and the earnings for affluent families.

But Biden is also promising a bonanza of government spending that, coupled with extremely low interest rates, would likely speed up the economy.

Investors shrugged off another delay in a Covid-19 vaccine trial, focusing instead on bank earnings. Both Johnson & Johnson and Eli Lilly halted their vaccine trials after at least participant became unexpectedly ill.

Here’s where things stand this morning.

Wall Street closed in the red on Tuesday after trading mixed for most of the session.

Apple (AAPL) announced the iPhone 12 in a virtual event on Tuesday. The various models are 5G-equipped, meaning they can connect to the next-generation high-speed wireless networks.

Apple will be hoping that its historically loyal user base will continue to shell out the big bucks to upgrade, even as the coronavirus pandemic continues to ravage the economy and forces millions to stay home. 

Investors, however, aren’t overly impressed. The stock closed nearly 3% lower Tuesday and are flat in premarket trading.

Read more here.