Corporate bond issuance off to a bang in September


Corporate borrowing is off to the races.


Getty Images

Companies wasted no time going back to the borrowing trough after the long Labor Day weekend.

U.S. investment-grade companies already borrowed $46.7 billion in the bond market this month through Wednesday, a single day that accounted for $21.3 billion of the total, according to BofA Global Research.

Notable among the week’s deluge was a debut $1 billion green bond issued by JP Morgan Chase & Co.
JPM,
-1.03%
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putting it alongside other major corporations from Google parent Alphabet
GOOG,
-1.60%

GOOGL,
-1.36%

to Visa Inc.
V,
-1.23%
,
which in recent weeks have raced to borrow with do-good purposes.

September often can be a busy month for corporate borrowing, as companies focus on the remaining weeks left in the year to lock in optimal financing — meaning before Thanksgiving, when the typical year-end lull begins to take hold.

Here’s a look at how September bond issuance stacked up over the past five years:

The pandemic has made this year anything but typical, including with a record $1.5 trillion already borrowed by investment-grade companies so far in 2020 to help fund their operations through the year’s end.

Many highly rated businesses borrowed fresh mounds of debt at lower rates than ever before, even though they are now carrying record levels of leverage.

Read: U.S. corporate debt soars to record $10.5 trillion

However, with the Federal Reserve’s unprecedented pandemic support, there’s little reason to think big businesses have had enough of today’s ultra-low borrowing rates.

“It’s a very busy September,” said Wendy Wyatt, a portfolio manager at DuPont Capital, of investment-grade bond supply. While she doesn’t expect to see the same eye-popping borrowing boom as in March, April and May, when companies were panic-borrowing, Wyatt has been encouraged by the recent trend where bond issuance has been used by more companies to kick their debts down the road or to repay near-term maturities.

“It’s not hideous. It’s a smart business decision,” she said of the debt replacement or reduction strategy, even through she’s also keeping an eye on companies that look to take on more debt to fund mergers and acquisitions.

“M&A has picked up and you’ve got to be cautious about that,” she said.

Related: Coronavirus slashes deal-making globally: What to expect next

To be sure, some of the big winners of the pandemic debt boom have been investment banks hired to arrange the funding.

Revenue at investment banks jumped 32% to $101.6 billion in the year’s first half from a year prior, its highest level since the first half of 2012, according to Coalition, a global analytics company.

What’s more, Coalition expects the year’s swift uptick in investment banking business, particularly in fixed-income, currencies and commodities, to combine with further head-count reductions at banks and produce an 12% return on equity for institutions it tracks in its index.

That would mark a significant reversal of a trend where ROE for banks in the index have declined each year since 2016, when it hit 9.5%.



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JP Morgan enters green bond push with $1 billion debut debt deal


The San Francisco skyline is obscured in orange haze Wednesday.


AFP/Getty Images

JP Morgan Chase & Co. entered the green-bond world on Wednesday, offloading the bank’s first set of bonds specifically to fund projects with a sustainability bent.

While the banking giant has arranged debt with an environmental or social-good purpose for its clients and other companies, this was JP Morgan’s first $1 billion foray into issuing such bonds on its own behalf.

Many investors welcomed the move, not only because of the weight JP Morgan
JPM,
+0.95%

carries in the market as the nation’s biggest U.S. bank by assets, but also because of a growing acceptance within the U.S. that a climate crisis threatens both environmental and financial instability.

Read: CFTC’s groundbreaking climate-change report sounds a bipartisan alarm on costly risks for U.S. financial system

JP Morgan’s bond deal hit as wildfires raged along the West Coast, with smoke from fires shrouding the San Francisco Bay Area on Wednesday in an eerie orange haze and underscoring how climate change threatens to make extreme fire events, power outages and forced evacuations the norm.

“The more the larger players come along, the larger the scale to move things along faster,” said Steve Liberatore, Nuveen’s lead portfolio manager for environmental, social and governance (ESG) criteria and impact investments.

But Liberatore also stressed that a key part of tackling the unfolding “climate disaster” is to mitigate it in an “economically beneficial way for the average person.”

That can mean achieving a lower cost of capital for renewable energy projects than what’s available for funding fossil fuels.

To that end, JP Morgan was able to pull in pricing Wednesday amid high investor demand, clearing the bonds at a spread of 48 basis points over Treasurys BX:TMUBMUSD10Y, after they initially were floated in the range of 65 basis points.

A bond spread is the level of compensation investors get paid above a risk-free benchmark to act as a creditor, with lower spreads often indicating high demand or a lower expectation of default.

“Generally, green bonds yield less, meaning the cost of financing is lower,” said Pri de Silva, senior corporate credit analysts at Aware Asset Management, adding that JP Morgan priced similar bonds in May that were trading on Wednesday closer to 58 basis points over Treasurys.

“From a funding perspective, I’d say there was a 10-basis-point advantage,” de Silva said, even though he noted the “sunk costs” involved in setting up the new green issuance platform, including providing the “belts and suspenders” to ensure there’s a process in place to track that only eligible projects are funded.

To that end, JP Morgan said proceeds from the debut green bond would finance a range of projects from green buildings to renewable energy, in a public filing.

Notably, the bank also listed areas that will be excluded from the funding from bond proceeds, including coal, oil, gas and nuclear energy projects, as well as activities that involve modern slavery, child labor and human rights exploitation.

Amid an overall corporate debt boom, the second quarter also saw a record $99.9 billion of “sustainability bonds” issued globally, according to Moody’s Investors Service, a category that encompasses green, social and sustainable bonds.

JP Morgan’s debut follows on the heels of Citigroup
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+0.70%

and Bank of America
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+0.11%
,
which issued green and social-good bonds earlier this year.

See: Bank of America sold a first-of-a-kind Covid-19 bond

“Banks are in a unique position to issue green bonds as they are interrelated with the broader economy,” said Brian Ellis, portfolio manager, Calvert Green Bond Fund.

“From an investor’s perspective, growth in green bond issuance provides increased opportunities for portfolio and project diversification, but also the ability to be more selective because there’s a larger group to choose from.”

JP Morgan declined to comment.



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Coronavirus update: Global death toll edges toward 900,000 as AstraZeneca halts vaccine trial after patient struck by illness


The number of confirmed deaths from the coronavirus that causes COVID-19 worldwide edged closer to 900,000 on Wednesday, and the U.S. death toll moved close to 190,000, as AstraZeneca halted trials of its vaccine candidate after one participant was struck by an unexplained illness.

The news sent AstraZeneca shares
AZN,
-1.13%

AZN,
-0.53%

lower, while the stocks of other drug makers developing vaccines, including Pfizer Inc., BioNTech SE and Moderna Inc.
MRNA,
+4.17%

rallied.

In an emailed statement, AstraZeneca said: “As part of the ongoing randomized, controlled global trials of the Oxford coronavirus vaccine, our standard review process was triggered and we voluntarily paused vaccination to allow review of safety data by an independent committee.”

It added that it is working to expedite the review of the single event to minimize any potential impact on the trial timeline. “We are committed to the safety of our participants and the highest standards of conduct in our trials.”

See:Vaccinating children against the flu is ‘more important than ever’ this year: pediatricians

A report in the New York Times said that the volunteer in the U.K. trial received a diagnosis of transverse myelitis, an inflammatory syndrome that affects the spinal cord. “However, the timing of this diagnosis, and whether it was directly linked to AstraZeneca’s vaccine, is still unknown,” the NY Times said. The British drugmaker declined to the comment.

For more, read:AstraZeneca stock falls as drugmaker pauses vaccine trial after volunteer’s ‘unexplained illness’

The news comes a day after AstraZeneca and eight other drug makers working on vaccines made a joint pledge to “stand with science” on coronavirus vaccines, making clear that they would not move forward with such products before demonstrating their safety and efficacy. The unusual pledge comes amid concerns the Trump administration may try to rush out a vaccine before the November presidential election.

Don’t miss: There are seven coronavirus vaccine candidates being tested in the U.S. — here’s where they stand

The World Health Organization reiterated Wednesday that safety has to come first with vaccine development. Dr. Soumya Swaminathan, chief scientist at the WHO, said at a news briefing that regardless of the speed with which drug makers are working, “it doesn’t mean that we start compromising or cutting corners on what would normally be assessed.”

Dr. Anthony Fauci, head of the National Institute for Allergies and Infectious Diseases and a member of the White House Task Force created to manage the pandemic, agreed.

In an interview with CBS, Fauci said it’s routine for a late-stage trial of a vaccine to be put on hold because of side effects, describing it as a safety valve, as the AP reported.

Fauci said a safe and effective coronavirus vaccine may be ready in early 2021.

“The more likely scenario is that we will know by the end of this calendar year and hopefully we’ll be able to start vaccinations in earnest as we begin early 2021,” he said.

In other news:

• French Prime Minister Jean Castex tested negative for the coronavirus in an initial test. Castex was tested after he spent part of the weekend with the head of the Tour de France cycling race, Christian Prudhomme, who tested positive, according to Reuters. France’s cabinet is holding its weekly meeting remotely for the first time since the end of the virus lockdown, AFP reported, and Castex is self-isolating at his official Paris Matignon residence for seven days.

• The British government is banning gatherings of more than six people in England, as officials try to keep a lid on daily new coronavirus infections after a sharp spike across the U.K. that has been largely blamed on party-going young adults disregarding social distancing rules, the AP reported. The law in England will change from next week to reduce the number of people who can gather socially from 30 to six, with some exemptions.

The number of confirmed cases of the virus rose to almost 3,000 on Sunday, before dipping to 2,460 on Tuesday. Failure to comply could result in a 100-pound ($130) fine. The U.K. has the fifth highest death toll from COVID-19 in the world at 41,675, according to data aggregated by Johns Hopkins University. On a per capita basis, it has the fourth highest mortality rate in the world with 61 deaths per 100,000 people, after Peru, Belgium and Spain, according to AFP data.

• Greece’s largest migrant camp on the island of Lesbos was destroyed in a fire that has left more than 13,000 asylum seekers homeless, the BBC reported. The Greek government has declared a four-day state of emergency. It’s unclear how the blaze began with some locals blaming migrants and others blaming locals.

The UNHCR, the UN refugee agency, said it was aware of “tensions” between nearby townsfolk and the migrants. “We urge all to exercise restraint,” it said, and asked anyone who had been at the camp “to restrict their movements and stay near [the site], as a temporary solution is being found to shelter them.”

• Former Italian Prime Minister Silvio Berlusconi, who is in hospital in Milan after testing positive for COVID-19 last week, said doctors treating him have told him he has was “No. 1” for the severity of his viral load, the Guardian reported. Berlusconi, 83, said that of the thousands of coronavirus tests carried out at San Raffaele hospital, doctors told him that he had the worst viral load. “[The virus] is very bad,” he said. “I’m giving it my all, I hope to make it and to get back on track,” he said in a phone call to a candidate from his Forza Italia party, the paper reported.

Read now: How Black doctors are answering the call to reform medical education — and bringing COVID-19 vaccine trials to communities of color

Latest tallies

There are now 27.6 million confirmed cases of COVID-19 worldwide, the Johns Hopkins data shows, and 898,426 people have died. At least 18.6 million people have recovered.

The U.S. has 6.3 million cases and 189,718 deaths. The U.S. added 28,550 new cases on Tuesday and 462 deaths, according to a New York Times tracker. That was down from an average of 36,704 over the past week, which was down 13% from the average two weeks earlier, the paper said. There are concerns those numbers could start to tick up if infections were spread by people gathering in large numbers over the Labor Day weekend, according to the Washington Post.

Brazil has the second-highest death toll at 127,464 and 4.16 million cases. India is third with 73,890 deaths and 4.37 million cases.

Mexico has fourth-highest death toll at 68,484 and 652,860 cases.

China, where the illness was first reported last year, has 90,087 cases and 4,733 deaths, according to its official numbers.

Is there other medical news?

Pfizer Inc.
PFE,
+0.83%

and BioNTech SE
BNTX,
+3.62%

plan to pursue regulatory review for their COVID-19 vaccine candidate BNT162b2 in October, depending on the success of the vaccine in late-stage clinical trials, MarketWatch’s Jaimy Lee reported.

However, the companies did not say what countries they plan to seek review in.

“When the [Phase 3] study reads out will depend on multiple variables but right now, our model, our best case, predicts that we will have an answer by the end of October,” Pfizer CEO Albert Bourla said Tuesday on the Today show, later noting that he means a clinical answer, not a regulatory one.

See also:To defeat COVID-19, ‘we need a unified national strategy,’ says public health expert Dr. Howard Koh

The companies also announced findings from the preclinical study of BNT162b2, which were published as a preprint, showing that when the vaccine was tested in macaques it prevented infection with the virus.

The companies also concluded exploratory talks with the European Commission (EU) for a proposed deal to supply 200 million doses of their vaccine candidate to the EU. The deal would include an option for an additional 100 million doses. T

he deliveries would start by the end of 2020, subject to regulatory authorization. Financial terms under discussion were not disclosed.

“We have activated our supply chain, most importantly our site in Belgium, and are starting to manufacture so that our vaccine would be available as soon as possible, if our clinical trials prove successful and regulatory approval is granted,” said Pfizer Chief Executive Albert Bourla.

What are companies saying?

• Alaska Air Group Inc.
ALK,
-4.18%

expects third-quarter capacity to be down about 55% from the year-earlier period as the pandemic continues to weigh. The airline expects September revenue to be down 70% to 75%, after a 72% decline in August. It expects its passenger load factor to come to 40% to 45%, after 46% in August. It expects available seat miles to be down about 50% after being down 51% in September. The company’s cash burn is expected to total about $150 million in September, after $80 million in August. The carrier had about $3.6 billion in cash as of Sept. 8.

• G-III Apparel Group Ltd.
GIII,
+0.69%

swung to a loss in the second quarter from a profit a year ago and posted sales that fell short of expectations, as the pandemic weighed. Second-quarter losses include a 53-cents-per-share loss due to the liquidation of 110 Wilsons Leather and 89 G.H. Bass stores. Other G-III brands include Donna Karan and Andrew Marc, and licenses for brands like Guess, Cole Haan and Calvin Klein. “We have reset our order book for the balance of the year and shifted our product assortment to athleisure, jeans, casual sportswear and coats,” said G-III Chief Executive Morris Goldfarb in a statement. For the second half of the fiscal year, G-III forecasts a sales decline in the range of 28% to 33%. The company did not provide additional guidance due to uncertainty from the pandemic.

• Hawaiian Airlines parent Hawaiian Holdings Inc.
HA,
-5.65%

provided an update on recent developments, including a modified reinstatement of a 14-day quarantine requirement imposed on passengers traveling from the Island of Oahu to the counties of Maui, Kauai and Hawaii, given an increase in COVID-19 case counts on Oahu. The requirement is effective Aug. 11. Separately, the air carrier expects capacity for the third quarter to be down 87% from the same period a year ago, which is slightly lower than previous forecasts, as a result of reduced travel demand resulting from government actions. Regarding demand, the company said flow passengers for the third quarter through Aug. 31 were down 87% and revenue passenger miles were 96% below last year’s levels. Hawaiian said it received confirmation that its allocation of the Coronavirus Aid, Relief and Economic Security (CARES) Act funds increased to $420 million from $364 million. The company has until Sept. 30 to determine whether it will draw any portion of those funds.

• HD Supply Holdings Inc.
HDS,
+3.56%

reported fiscal second-quarter profit that beat expectations while sales fell in line with forecasts. The industrial distributor company’s facilities maintenance sales fell 8.3% to $761 million, but topped the FactSet consensus of $752.2 million, while construction and industrial sales slipped 0.3% to $793 million to miss expectations of $802.3 million. The company said it was not providing a financial outlook for the third quarter or the full year, given uncertainties over the effects of the COVID-19 pandemic, but said August sales were $518 million, representing an average daily decline of 0.7%.

• LVMH Moet Hennessy
MC,
-0.11%

will not be able to complete the previously announced takeover of U.S. luxury goods retailer Tiffany
TIF,
-10.12%

“as it stands.” LVMH cited both a letter from the French government asking for a delay in light of the threat of tariffs on French products by the U.S., as well as Tiffany’s request to extend the deadline from Nov. 24 to Dec. 31. Tiffany for its part filed a lawsuit in Delaware to enforce the acquisition. “The lawsuit not only makes clear that LVMH is in breach of its obligations relating to obtaining antitrust clearance, but also refutes LVMH’s suggestions that it can avoid completing the acquisition by claiming Tiffany has undergone a Material Adverse Effect (”MAE”) or breached its obligations under the Merger Agreement, or that the transaction is in some way inconsistent with its patriotic duties as a French corporation,” said the Tiffany release.

• MasterCraft Boat Holdings Inc.
MCFT,
-19.98%
,
the recreational powerboat maker, reported a narrower-than-expected fiscal fourth-quarter loss and provided an upbeat sales outlook. Sales for the quarter, which is historically the lowest of the year, dropped 58% to $51.1 million, due primarily to lost production as a result of COVID-19-related shutdowns, but was above the FactSet consensus of $36.8 million. Dealer inventories at the end of the fiscal year were 40% to 50% lower than a year ago. For the first quarter, the company expects sales to be down in the low-to-mid teens percentage range, while the current FactSet consensus of $86.2 million implies a 21.5% decline.

• Rocket Companies Inc.’s
RKT,
+4.63%

Quicken Loans subsidiaries are planning to offer $1.25 billion in senior notes due 2029 and 2031. The mortgage and financial services company, which went public last month, said it expects to use the proceeds from the debt offerings to pay down all of the $1.25 billion of 5.75% senior notes due 2025. Rocket joins the many companies issuing record levels of debt during the pandemic.

• United Airlines Holdings Inc.
UAL,
-4.03%

lowered its outlook for third-quarter capacity and passenger revenue, and but said it has witnessed “a moderate improvement” in travel demand over the past couple of weeks. United now expects third-quarter capacity to be down 70% from a year ago, compared with previous guidance for a 65% decline. Passenger revenue is now expected to be down 85%, versus previous guidance for an 83% decline. “The company does not currently expect the recovery from COVID-19 to follow a linear path. As such, the company’s actual flown capacity may differ materially from its currently scheduled capacity,” United said. The company affirmed its Q3 average daily cash burn rate of $25 million, and said it still expects total available liquidity to be over $18 billion at the end of the quarter.

• United Parcel Service Inc.
UPS,
+2.15%

expects to hire more than 100,000 employees for the holiday season, which is the same as last year despite expectations of record seasonal volume. . The seasonal hires will support expected increase in package volume that is expected to begin in October and continue through January. “We’re preparing for a record peak holiday season. The COVID-19 pandemic has made our services more important than ever,” said Chief Human Resources Officer Charlene Thomas. The package delivery giant said that over the past three years, about 35% of seasonal hires were later hired for permanent positions. About one-third of UPS’s current 123,000 employees started in seasonal positions.



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U.S. regains 1.4 million jobs in August and unemployment drops to 8.4% as economic recovery shows resilience


The numbers: The U.S. regained 1.4 million jobs in August and the unemployment rate posted a surprisingly large drop to 8.4%, suggesting an economic recovery is still plowing ahead even if the pace of growth has slowed since the start of the summer.

The increase in hiring last month exceeded Wall Street’s forecast. Economists polled by MarketWatch had forecast a 1.2 million gain. U.S. stocks fell in Friday trades.

The employment picture was a bit softer after stripping out the hiring of 238,000 temporary Census workers and those who work in public education.

Private-sector hiring rose by 1 million, down from 1.48 million in July, the government said Friday.

The most positive news was a big reduction in the official jobless rate to 8.4% from 10.2%, marking the fourth straight decline from a pandemic peak of 14.7%. A separate survey of households showed a much larger number of people returning to work (3.76 million) and a sharp decline in the unemployed (-2.8 million).

“I would say today’s jobs report was a good one,” Federal Reserve Chairman Jerome Powell told NPR in an interview.

One caveat: The jobless rate would have been closer to 9% if households gave an accurate description of their employment status, the Bureau of Labor Statistics said. Some survey respondents have mistakenly classified themselves as absent from work instead of unemployed, a problem that has plagued the BLS survey since the pandemic began.

Several million Americans still haven’t returned to the labor force, however, since the start of the pandemic and some 29 million were reportedly receiving jobless benefits as of the middle of last month.

Read: Initial jobless claims fall to new pandemic low of 881,000 — but there’s a big catch

The start of the school year, what’s more, has also spawned fresh problems for companies and their employers.Many parents lack day-care options and are grappling with how to care for their school-age children learning at home while they work at the same time.

A new Federal Reserve study found the new school year has made it harder for businesses that are hiring to attract workers.

Read:Economy softened in August, Fed says, as some temporary layoffs turn permanent

A stalemate in Congress over another financial-rescue package has also left many unemployed Americans in a more precarious financial position. A $600 federal unemployment stipend expired at the end of July and small businesses can no longer apply for loans to help cover payroll costs.

Read: Did the expired $600 federal jobless benefit keep people from going back to work?

A spate of companies such as American Airlines
AAL,
+1.87%
,
United
UAL,
+2.16%

and MGM Resorts
MGM,
+1.95%
,
meanwhile, have announced new furloughs and layoffs with their businesses still in a deep slump.

A United Airlines ticket agent helps a passenger check in for a flight at San Francisco International Airport. United Airlines announced plans to furlough over 16,000 workers including pilots, flight attendants and technicians.


Getty Images

Some companies warn job losses could become permanent without more government help or a faster rebound in the economy.

The U.S. shed more than 22 million jobs during the worst of the pandemic. So far it’s restored about 10.7 million jobs, leaving about half of the people who were laid off still out of work.

What happened: The number of peopled employed by government jumped by 344,000, largely because of a big increase in temporary Census workers.

In the private sector, retailers led the way in hiring again as they brought back almost one-quarter of a million workers. Restaurants also added 134,000 jobs.

Retailers, restaurants and hotels have borne the brunt of the U.S. effort to contain the coronavirus. The number of customers they can allow has been restricted and many Americans are still too worried about the coronvirus to eat out, go to stores or travel.

Even after a spate of rehiring, for instance, some 2.5 million restaurants jobs still haven’t returned.

The rest of the hiring was scattered in a variety of industries.

White-collar businesses added almost 200,000 jobs, though more than half were temporary. Transportation and warehousing jobs increased by 78,000. Health-care providers boosted payrolls by 75,000. Financial firms hired 36,000 workers. And manufacturers added 29,000 people.

Average hourly wages rose 11 cents to $29.47 an hour. The yearly rate of pay appeared to soar early in the pandemic, but only because more lower-paid workers lost their jobs than higher paid ones.

The normally slow-changing wage data is likely to be less useful until the economy is mostly recovered. Wages were growing about 3% a year before the pandemic.

The increase in employment in July marked down slightly to 1.73 million. The increase in June was little changed at 4.79 million.

How many people are really unemployed, though, is still a bit of a mystery. The monthly employment survey puts the number at 13.6 million, but the weekly jobless-claims report indicates it could be closer to 30 million.

A broader measure of unemployment known as the U6 suggests the “real” rate was 14.2% in August, down from 16.5% in the prior month. The U6 rate includes workers who can only find part-time work and those who have become too discouraged to look for jobs because so few are available.

Big picture: The U.S. economy have proven quite resilient, expanding again in August despite the summer viral outbreak and the end of massive federal benefits. A variety of reports such as restaurant reservations, retail spending and in-store shopping also suggest an increase in consumer spending and steady if slower growth in the economy.

What’s less clear is whether the economy can sustain its foward progress.

Unemployment remains sky-high, the threat of a fresh wave of layoffs is rising and the coronavirus is still very much a threat. A divided political leadership in Washington and one of the most divisive presidential elections in history is unlikely to help, either.

See:Marketwatch’s Coronavirus Economic Recovery Tracker

What they are saying? “The August employment report was stronger than we expected,” said chief economist Richard Moody of Regions Financial. “ That said, while the labor market is clearly healing, it remains far from healthy.”

There are certain industries that are essentially stuck until the virus recedes further, such as air travel, sporting event and concert admissions,” said chief economist Stephen Stanley. “But for most of the economy, the return to normal is occurring inch by inch and day by day, with plenty more to come.”

Market reaction: The Dow Jones Industrial Average
DJIA,
-0.56%
,
S&P 500
SPX,
-0.81%

and Nasdaq
COMP,
-1.26%

all declined in Friday trades.



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Stock futures lower despite fall in U.S. jobless claims


U.S. stock-index futures fell early Thursday, while investors sift through economic data including the weekly jobless benefit claims report, after the stock market posted one of its best daily gains in weeks on Wednesday.

How are equity indexes performing?

Futures for the Dow Jones Industrial Average
YM00,
-0.05%

YMU20,
-0.05%

were off 22 points, or 0.1%, at 29,069; those for the S&P 500 index
ES00,
-0.50%

ESU20,
-0.50%

were off 16.20 points at 3,563, a decline of 0.5%; Nasdaq-100 futures
NQ00,
-1.34%

NQU20,
-1.34%

were down 140.50 points, or 1.1%, at 12,271.

On Wednesday, Dow
DJIA,
+1.58%

surged 454.84 points, or 1.6%, ending at 29,100.50, or 1.5% away from its Feb. 12 closing high of 29,551.42. The S&P 500 index
SPX,
+1.53%

climbed 54.19 points, or 1.5%, to settle at a record 3,580.84, its 22nd record close this year. The Nasdaq Composite Index
COMP,
+0.97%

advanced 116.78 points to close at a record 12,056.44, a gain of 1%, and its 43rd record close of the year.

What’s driving the market?

After a day of records for the S&P 500 and the Nasdaq Composite and the rapid of approach of the Dow to its own record, investors watched U.S. weekly jobless benefits claims data on Thursday morning.

Total new applications for unemployment benefits in the latest weekly period ending in Aug. 30 fell 130,000 to a seasonally adjusted 881,000 or lower than the consensus estimate of 940,000. This comes after the Labor Department said it tweaked its seasonal adjustment method amid the COVID-19 pandemic.

In other data, a revised reading of U.S. second-quarter productivity rose 10.1%, while the trade deficit widened to $63.6 billion.

Read: ADP says private sector added a less-than-expected 428,000 new jobs in August

Investors will also be watching a reading on the purchasing managers index in services from IHS Markit at 9:45 a.m. ET, and a survey by the Institute of Supply Management on activity in the service sector at 10 a.m. ET.

Market participants have been contending with a nearly incessant climb higher, with the focus on remedies for COVID helping to partially buttress the recent run-up. That said, Wednesday’s climb for stocks came even as large-capitalization technology-related stocks staged a pullback that didn’t disrupt the upward momentum of the broader equity market. Tech-related names have led the rebound of the market from coronavirus-lows but some strategists spotted encouraging signs that other areas beyond tech-related names were starting to rise.

“The more broad based this becomes, the more it signals a turning of the tide as far as the economic outlook is concerned, at least among those on Wall Street,” wrote Craig Erlam, senior market analyst at Oanda, in a daily research note.

However, there are concerns that market has climbed too far and too fast and that optimism over a vaccine for coronavirus is misplaced. The Centers for Disease Control and Prevention urged states to speed up approval for vaccine distribution sites by Nov. 1, which is just days before the presidential election.

Meanwhile, doubts about traction for further fiscal stimulus from Washington lawmakers has continued to haunt investors. Investors have been betting on Republicans and Democrats striking a deal later this month to offer additional relief to American consumers and businesses, after talks stalled in August. On Tuesday, House Speaker Nancy Pelosi said Democrats and Republicans still have “serious differences,” following a brief phone call.

Separately, tensions flared up between Beijing and Washington as the Trump administration signaled plans to impose new restrictions on Chinese diplomats in the U.S., citing Beijing’s use of similar measures on American envoys. The Chinese embassy in Washington responded by accusing the U.S. of violating international conventions.

Which stocks are in focus?
  • Michaels Cos. Inc. shares
    MIK,
    -2.34%

    soared 6.7% in premarket trade, after the arts and crafts retailer blew past estimates for the second quarter as stores reopened after being closed during the pandemic.

  • Shares of Sanofi
    SNY,
    +1.06%

    gained 0.4% before the bell after the drugmaker and GlaxoSmithKline
    GSK,
    +2.41%

    said their COVID-19 vaccine candidate has entered a Phase 1/2 clinical trial.

  • Arconic Corp.
    ARNC,
    -0.74%

    said Thursday it restored the salaries and 401K match for all of its U.S. salaried employees, including executives on Sept. 1, after cutting them earlier this year to counter the impact of the coronavirus pandemic.

  • Shares of Designer Brands Inc.
    DBI,
    +6.03%

    plummeted 19% in premarket trading Thursday, after the parent of the DSW Designer Shoe Warehouse retail chain reported a wider-than-expected fiscal second quarter

  • Facebook
    FB,
    +2.39%

    slipped after announcing Thursday it will ban new political ads from running in the week before the Nov. 3 presidential election.

How are other markets trading?

The 10-year Treasury note yield
TMUBMUSD10Y,
0.646%

edged 0.3 basis point higher to 0.653%. Bond prices move inversely to yields.

The ICE U.S. dollar index
DXY,
+0.03%

, which tracks the performance of the greenback against its major rivals, was up 0.2%.

Gold futures
GCZ20,
-0.20%

were down 0.4% to trade at $1,936.80 an ounce, on the New York Mercantile Exchange. U.S. benchmark crude futures
CL.1,
-2.21%

fell 2.2% to a one-month low of $40.61 a barrel.

The Stoxx Europe 600 index
SXXP,
+0.67%

rose 0.4%, while the U.K.’s benchmark FTSE
UKX,
+1.11%

as up 0.5%. In Asia, Hong Kong’s Hang Seng index
HSI,
-0.44%

fell 0.5% and China’s CSI 300
000300,
-0.55%

closed 0.6% lower. The Nikkei
NIK,
+0.93%

rose 0.9%.



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