Wall Street edged up on Tuesday, recovering part of previous losses. However, the three indexes departed from session highs.
Investors priced in the cautious optimism surrounding the stimulus negotiations between Republican and Democrat lawmakers. House Speaker Nancy Pelosi nurtured hopes by saying Democrats might reach a deal with the White House that could deploy the next stimulus package in early November. She said that there should be more hints of a potential agreement later on Tuesday.
However, Senate Majority Leader Mitch McConnell warned Republicans not to pass the large stimulus bill.
Yet Donald Trump supported optimism by hinting that he would accept a stimulus package with a higher cost than the proposed $1.8 trillion tag. “I want to do it even bigger than the Democrats,” the president said.
After advancing over 1%, the three indexes gave up momentum and secured only a third or half of the intraday rally gains. The S&P 500 rose 0.47%, the Dow added 0.40%, and Nasdaq advanced 0.33%.
The third-quarter earnings season goes on. So far, out of 66 S&P companies that have already shown their cards, over 86% of them have exceeded forecasts for earnings.
Procter & Gamble rose over 0.5% after reporting Q3 results that beat estimates and raising its guidance amid a pandemic-driven boost to demand for its household goods.
IBM tumbled about 6% after reporting declining revenue on Monday and failing to provide guidance, citing uncertainty caused by the pandemic.
Snap jumped over 16% in after-hours trading after the social media firm reported a surprising Q3 profit on the back of a surge in user growth. Snap reported EPS of 1 cent, while analysts expected a loss of 5 cents.
Netflix fell 5% after reporting Q3 earnings that fell short of expectations amid a decline in subscriber growth.
Elsewhere, the US Justice Departments and 11 states filed an antitrust lawsuit against Google, accusing it of using its power to hinder rivals. Despite that, Alphabet shares rose over 2%. The lawsuit might end up with a break-up of the tech giant.
In Asia, stock markets are mixed on Wednesday, but bulls have a stronger voice.
At the time of writing, China’s Shanghai Composite is down 0.22%, and the Shenzhen Component slumped 1.51%.
Hong Kong’s Hang Seng Index is up 0.72%. The city eased some social distancing measures to allow wedding ceremonies of up to 50 guests and local tours of up to 30 people each.
Japan’s Nikkei 225 has added 0.27%, and South Korea’s KOSPI is up 0.40%. Official data showed that Korea’s Producer Price Index (PPI) increased 0.4% y/y and 0.1% m/m, both lower than August figures.
In Australia, the ASX 200 closed 0.12% higher. Data released earlier on Wednesday showed a 0.2% m/m increase in the Westpac/Melbourne Institute (MI) Leading Index, which precedes retail sales figures. The reading was smaller than the 0.5% growth in August.
European stocks will open higher, as the futures on most indexes are bullish.
In the commodity market, oil prices have declined as investors are worried about oversupply after an unexpected increase in US crude inventories. The American Petroleum Institute said that crude inventories rose almost 600,000 barrels in the week ending on October 16, while analysts expected a draw of about 1 million barrels. Meanwhile, the number of COVID infections continues to increase, with some European countries introducing new lockdown measures.
Gold is up on stimulus hopes and amid a weakening US dollar. The metal has gained 0.25% to $1,920, touching the highest level since October 13. However, gold might lose ground if stimulus talks lead to nowhere.
In FX, the greenback continued to decline amid stimulus hopes, as investors shifted to riskier assets. The USD Index fell 0.27% to a monthly low at 92.800. EUR/USD surged 0.32% to 1.1860.
