Stock futures rose higher Tuesday morning after a selloff on Wall Street pushed the Dow and S&P 500 to their biggest one-day drops in more than a month.
Contracts on the Dow added more than 100 points, or 0.4%, shortly after 7 a.m. in New York. A day earlier, the index dropped 650 points, or 2.3%, for its worst single-session decline since the beginning of September. The S&P 500 fell 1.9% for its worst drop since September 23, and the Nasdaq fell 1.6% for its worst decline in a week.
Airline, cruise line and resort stocks also stabilized in early trading after enduring steep declines earlier in the day, as traders fled from names most exposed to disruptions that could occur if a jump in virus cases further stems discretionary travel. Advanced Micro Devices (AMD) shares sank in early trading after the company announced it agreed to purchase peer chipmaker Xilinx (XLNX) in a $35 billion all-stock deal, confirming rumors from earlier this month. Shares of Xilinx jumped 10%.
Concerns over elevated new case counts in the U.S. and abroad contributed heavily to traders’ jitters. Domestically, cases hit a record high of more than 80,000 on Friday and held above that threshold again on Saturday. Dr. Anthony Fauci, the nation’s top infectious disease expert, said during Yahoo Finance’s All Markets Summit on Monday that the U.S. is still in the “original first wave” of the pandemic, given that cases never stabilized to a more manageable level to begin with. Overseas, the Czech Republic on Monday joined France, Spain and Italy in imposing an evening curfew to try and curb the spread of the coronavirus, with cases again surging across Europe.
The virus resurgence compounded with ongoing uncertainty over the U.S. election results next week and discussions over another significant coronavirus relief package out of Washington.
To the latter point, negotiations took place again between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin Monday afternoon, although the time to pass a bill before Nov. 3 continues to narrow. Pelosi’s spokesperson Drew Hammill said on Twitter after their meeting, “The Speaker remains optimistic that an agreement can be reached before the election,” while adding that “progress depends on Leader [Mitch] McConnell agreeing to bipartisan, comprehensive legislation.” U.S. senators left Washington for a break ahead of the election Monday, however, leaving chances of a pre-election stimulus package incredibly low.
Some analysts noted that the upbeat comments from lawmakers about the timing of a relief bill has rung hallow to investors in recent days, given that stimulus negotiations have gone on for months now without major progress.
“Equity investors proved that talk is cheap when it comes to delivering on additional stimulus as stocks resumed their decline this week on the lack of agreement on a comprehensive stimulus package,” Charlie Ripley, senior investment strategist for Allianz Investment Management, said in an email Monday. “We think the ability to get stimulus done is fading each day as we get closer to the U.S. election, but are reminded that volatility is expected to stay as uncertainties surrounding the path of the virus and the outcome of the election continue to weigh on investors’ minds.”
7:54 a.m. ET: JetBlue tops 3Q estimates, though sales still drop 76% over last year
JetBlue (JBLU), another airline hard-hit by the pandemic and decline in travel, on Tuesday posted third-quarter sales and earnings that were better than feared. Operating revenue of $492 million dropped 76% over last year, but still topped estimates for about $463 million. Its adjusted loss per share of $1.75 was narrower than the loss of $1.90 a share expected.
The company’s third-quarter cash burn averaged $6.1 million per day, or better than the company’s previously expected range of as much as $9 million a day. Its fourth-quarter average daily cash burn will likely be between $4 million and $6 million, the company said.
Overall sales will likely decline by about 65% in the fourth quarter, JetBlue added. And its capacity will likely be down 45%, following a 58% drop in capacity during the third quarter.
7:49 a.m. ET: 3M sales grow 5% over last year, earnings top estimates as health-care products, consumer product sales jump
Health-care sales jumped nearly 26% to $2.2 billion during the quarter, led by purification and medical solutions sales. Safety and industrial sales increased 6.9% to $3 billion, with growth in personal safety and auto aftermarket supplies sales contributing to the rise. Consumer sales were up nearly 6% to $1.4 billion, with home-care and home-improvement revenue offsetting a drop in office supplies as people continue to work from home.
Transportation and electronics was the one major business group that still saw a sales decline during the third quarter, with these dropping more than 7% to $2.3 billion on account of a drop in aerospace and transportation safety demand.
Overall, revenue grew nearly 5% over last year to $8.4 billion. Adjusted earnings of $2.43 per share beat estimates for $2.26. October sales will likely be flat to up low-single digits, 3M said, while declining to provide full-year guidance.
7:30 a.m. ET: Caterpillar stems sales decline as demand trends improve, sales to China pick up
Caterpillar (CAT) on Tuesday posted third-quarter results that topped consensus expectations, with adjusted earnings of $1.34 per share on revenue of $9.88 billion each ahead of estimates for $1.13 per share on revenue of $9.19 billion. That represented a top-line decline of 23% over last year, which improved from the 35% drop reported for the second quarter this year. Earnings, however, were still down by half over last year.
While a drop in end-user demand over last year contributed to the ongoing declines, Caterpillar said Tuesday it expects “less of a decline in end-user demand” in the fourth quarter than in the third. The company also expects dealers to reduce their inventories by about $700 million in the fourth quarter and by $2.5 billion for the full year, or about in-line with its second-quarter guidance for inventories to fall by greater than $2 billion for all of 2020.
Construction industries, Caterpillar’s largest sales category, saw revenue drop 23% over last year to $4.05 billion. Every geography reported declines except for Asia Pacific, where sales grew “primarily driven by China demand, which was partially offset by lower sales in the rest of the region,” Caterpillar said.
7:15 a.m. ET Tuesday: Dow futures add 100+ points as equities look to recover some losses
S&P 500 futures (ES=F): 3,408.00, up 14.5 points or 0.43%
Dow futures (YM=F): 27,685.00, up 104 points or 0.38%
Nasdaq futures (NQ=F): 11,547.25, up 55 points or 0.48%
Crude (CL=F): +$.0.44 (+1.14%) to $39.00 a barrel
Gold (GC=F): -$2.90 (-0.15%) to $1,902.80 per ounce
10-year Treasury (^TNX): -0.4 bps to yield 0.799%
6:14 p.m. ET Monday: Stocks tick up after selloff
Here were the main moves in markets, as of 6:14 p.m. ET:
S&P 500 futures (ES=F): 3,397.6, up 4 points or 0.12%
Dow futures (YM=F): 27,603.00, up 22 points or 0.08%
Nasdaq futures (NQ=F): 11,508.25, up 16 points or 0.14%