Futures Rise on Earnings Optimism, Rising Stimulus Expectations

The S&P futures added 31 points this morning as investors continue to eye updates from Capitol Hill on a potential stimulus package. President Trump has raised his latest offer on a deal to $1.8 trillion. Speaker Nancy Pelosi has said that the stimulus talks remain tied up in negotiations, while Senate Majority Leader Mitch McConnell said a deal would be unlikely over the next three weeks. The new White House offer includes upwards of $330 billion in new PPP funds. Each adult would also receive $1,200 in stimulus with a $1,000 payment per child.

Let’s take a look at the numbers from Friday before we get into the headlines driving the futures market. 

IndexPrevious CloseNominal ChangePercent Change
S&P 5003477.13+30.30+0.88%
Dow Jones28586.90+161.39+0.57%

Here are the things that I’m paying attention to this morning, or else no one else will.

The Rundown: Today’s Top Market Stories

  1. Saddle up, buttercup. It’s the start of “earnings” week. And if you think that we can get the limbo bar for expectations lower than the actual tundra, you’d be wrong. Investors are hoping that the busy week of earnings including reports from Bank of America (BAC), Goldman Sachs (GS), JPMorgan (JPM), and Morgan Stanley (MS) will be positive for the markets. That said, Q2 was a surprise period for markets, despite low expectations. 85% of companies topped expectations with an average beat of 20%. This time around, consensus expectations call for a median 20% drop for S&P 500 companies during this earnings season.
  2. We’re still assessing the damage from Hurricane Delta over the weekend. The hurricane made landfall on Friday and knocked almost all of the Gulf region’s energy production offline. The storm also forced the shutdown of all major ports from Beaumont, Texas, to Lake Charles, Louisiana. Last week’s hurricane and the ongoing oil worker strike in Norway helped push crude prices up about 9% last week.
  3. The bond markets are closed today in observance of Columbus Day. The 10-year Treasury is sitting at roughly 0.775%. On Friday, the Commitment of Traders report indicated that the leveraged funds and large speculators are VERY short on bonds and don’t anticipate an uptick in yield any time soon. The total number of bearish positions on the 30-year Treasury futures well outpaced the bullish ones. The net short figure was 230,312 contracts on Oct. 6. That is a new record, according to the CFTC.

COVID-19 Updates

This morning, the key COVID story driving the market is the state of the antibody treatments. The Trump administration says it expects to offer at least 1 million doses of new antibody treatments similar to what President Trump received during his illness. This is great news for Regeneron and Eli Lilly shareholders. Trump told Rush Limbaugh (what? where do YOU go for breaking pharma stock tips?) that his administration was working to get the cocktail of drugs approved quickly. Meanwhile, the White House physician said over the weekend that President Trump is no longer a transmission risk to those around him. However, the doctor didn’t say whether Trump has still tested positive after recently contracting COVID-19.

Today’s Top Stocks to Watch: AMZN, WMT, TGT, BBY, ICLN

AMZN: Amazon.com will host its Prime Day shopping event between October 13 and 14. Analysts expect that the annual shopping event could boost the company’s bottom line by a staggering $10 billion. “Despite an uncertain economy, consumers will continue to spend heavily on e-commerce and actively seek deals heading into the holiday season,” according to eMarketer, which expects total sales to come in at $9.91 billion during the event this week.

WMT, TGT, BBY: While Amazon is poised for a big run this week through eCommerce, rivals Walmart and Target are trying to boost their physical-store retail sales. Their solution is to increase deals and offers for curbside pickup during their rival’s shopping event. When Prime Day starts tomorrow morning, Target will announce its “Deal Days” event, while Walmart hosts a “Big Save Event.” Meanwhile, Best Buy announced plans to simply start its Black Friday shopping events… because why the hell not, right? There are only 75 days until Christmas.

ICLN: Want a sign that Wall Street expects Democratic candidate Joe Biden to win the election? Look at the price of the iShares Global Clean Energy ET. Shares have hit their highest levels in a decade thanks to bullish options trading around climate change and renewable.