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US pre-open: Futures turn red as stimulus talks remain in focus

By Iain Gilbert

Date: Wednesday 21 Oct 2020

US pre-open: Futures turn red as stimulus talks remain in focus

(Sharecast News) - Wall Street futures were trading lower ahead of the bell on Wednesday as White House chief of staff Mark Meadows said Nancy Pelosi and Steven Mnuchin still had "a ways to go" before reaching a stimulus agreement.
As of 1225 BST, Dow Jones futures were down 0.20%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.12% and 0.14% weaker, respectively.

The Dow Jones closed 113.37 points higher on Tuesday as House Speaker Nancy Pelosi said her and Treasury Secretary Steven Mnuchin were making progress in their ongoing stimulus talks.

Meadows said that both the House Speaker and Treasury Secretary would talk again on Wednesday, adding that he hoped the pair would be able to reach "some kind of agreement before the weekend".

Pelosi said on Tuesday that she was "optimistic" about the potential of the two striking an aid deal. However, Senate majority leader Mitch McConnell said he was encouraging the White House not to agree on a major bill over concerns that it could divide Republican Party members just days before the US election on 3 November.

CMC Markets' David Madden said: "Discussions between the House Speaker, Nancy Pelosi, and Steven Mnuchin, the Treasury Secretary, have been dragging on for months now, and dealers are losing their patience with the situation.

"US politicians are likely to reach a compromise at some point because the economy needs another injection of cash, but it seems that traders have resided to the fact that it is unlikely that a deal will be struck this side of the Presidential election - which will take place early next month. The lack of a stimulus scheme combined with growing fears about the health crisis have hurt stocks."

In terms of earnings, Netflix fell short on estimates for subscriber additions and earnings per share overnight, while Snap and Texas Instruments both beat forecasts with their latest quarterly report cards.

Biogen, Abbott Labs, Whirlpool, Verizon, Chipotle and Tesla will all report earnings on Wednesday.

On the macro front, mortgage applications dropped for a fourth straight week, according to the Mortgage Bankers Association's most recent weekly survey.

Mortgage applications fell 2% in the week ended 16 October, while the purchase index was up 26% year-on-year and the refinance index remained broadly flat week-on-week - up just 0.2%

Turning to the Federal Reserve, Lael Brainard will deliver a speech at 1350 BST, while Loretta Mester will speak at 1500 BST and the central bank's Beige Book will be published at 1900 BST.

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