US open: Stocks set to snap losing streak after strong retail sales data

16 October 2020

(Sharecast News) - Wall Street stocks opened higher on Friday as vaccine news, stimulus talks, a solid beat in September retail sales figures and a strong preliminary reading of the University of Michigan's consumer sentiment index were all in focus.
As of 1545 BST, the Dow Jones Industrial Average was up 1.11% at 28,810.89, while the S&P 500 was 0.84% firmer at 3,512.64 and the Nasdaq Composite came out the gate 0.82% stronger at 11,809.97.

The Dow Jones opened 316.69 points higher on Friday, reversing losses seen in the previous session as major indices' extended their losing streak to a third consecutive session.

With corporate earnings taking up much of investors' attention so far this week, stimulus returned to the forefront on Friday - a quiet day on the results front, comparatively.

US lawmakers were continuing to send mix signals when it came to what progress they had made toward a new Covid-19 stimulus deal.

Treasury Secretary Steven Mnuchin said on Thursday that the White House would not allow differences over funding targets for coronavirus testing to derail talks with key members of the Democratic Party.

Donald Trump stated he would up his offer for a stimulus package above the current level of $1.8trn. While the President did not say whether or not he would match the $2.2trn bill passed by House Democrats, Mnuchin reiterated that he would not put a large fiscal stimulus package to the Senate.

On the macro front, Americans continued to splash out at pace last month, despite the slowdown in hiring and a rebound in Covid-19 infections in many states. According to <em>the Department of Commerce</em>, in seasonally adjusted terms, US retail sales volumes bounded ahead at a month-on-month pace of 1.9% to reach $549.3bn. Economists had pencilled in an increase of 0.7%.

Elsewhere, industrial output in the US missed economists' forecasts by a mile in September amid a slump in output of automobiles and computers. <em>The Department of Commerce</em> said that total output shrank at a month-on-month pace of 0.6% last month, instead of rising by the same amount as the median projection of the consensus had anticipated

Lastly, <em>the University of Michigan</em>'s October preliminary consumer sentiment index improved to a reading of 81.2 after printing at 80.4 in September.

Turning towards the central bank, Federal Reserve Bank of New York president John Williams said moderate inflation overshoot was acting as a "guard rail" for the US economy.

"It's also about proportionality," he added. "It is specific to the circumstances, and I would also say it is specific to where the economy is."

In earnings news, <strong>Bank of New York Mellon</strong> beat analyst estimates on both earnings per share and revenues, stating its third-quarter results reflected the "resilience" of its business model despite "significant" impacts from lower rates and associated money market fee waivers.

Still in the corporate space, <strong>Pfizer</strong> announced that it would apply for emergency use of its Covid-19 vaccine after reaching certain safety milestones, which it expects to meet in late November, while <strong>Boeing</strong> shares were flying higher after European regulators said its 737 Max jet was now safe to fly again.