Wall Street Close: A bleak outlook for US weighs on stocks and the US dollar

•  DJIA fell 225.92 points, or 0.85%, to 26,313.65.
• SPX lost 12.22 points, or 0.38%, to 3,246.22.
• NDX bucked the trend and added 44.87 points, or 0.43%, to 10,587.81.

Wall Street’s stocks were declining on Thursday over concerns about earnings, US data, stimulus and the US elections.

Firstly, US elections are now coming to the fore of the market’s playing field.

Both the S&P 500 and Dow closed lower and had wobbled during the session when the US President Donald Trump exacerbated investor nervousness in a tweet, floating the possibility delaying the US presidential election.

The tweet provoked an array of congressional Republicans to respond, including more than a dozen members in both the House and Senate and in the party’s leadership, who openly rejected President Donald Trump’s suggestion.

It is argued that it is a move that the President would have no authority to make because the Constitution gives Congress the power to set the date for voting.

Speaker Nancy Pelosi responded by citing that the congressional authority needed to do so. 

“Article II, Section 1 of the Constitution states: ‘The Congress may determine the Time of choosing the Electors, and the Day on which they shall give their Votes; which Day shall be the same throughout the United States,’” Pelosi tweeted Thursday.

US economy plunges a titanic 32.9%

In data, Q2 Gross Domestic Product fell a record 32.9% seasonally adjusted annualised rate (saar). That translates into an 8.2% q/q drop.

The weakness in GDP was broad-based affecting personal consumption, CAPEX and state and local government spending, exports, and inventories, analysts at ANZ Bank noted.

Exports fell 64.1% saar, gross private domestic investment fell 49% and equipment spending dropped 37.7%. The data crystallised the huge output gap and the extensive disinflation pressures the economy faces. Interest rates will not be rising for a long time, and this highlights the need for ultra-easy policy settings.

Additionally, US initial jobless claims rose to 1.434m vs an upwardly revised 1.422m the prior week.

The earlier improvement in the jobs market is stalling and the rise in continuing claims is a particular concern, indicating that the rehiring of furloughed workers has halted. Continuing claims rose to 17.02m vs 16.15m,

the analysts ay ANZ said.

While the data painted a worrying economic picture, this came on on a crucial day for corporate earnings reports.

The main earnings focus on Thursday was on reports from high-flyers including Appl AAPL, Google parent Alphabet Inc GOOG and Facebook Inc FB and Amazon.com Inc AMZN.

Alphabet Inc. met street expectations despite a dip in advertising that bedevilled the company for a second straight quarter.

• The company GOOGLE reported net income of $6.96 billion, or $10.13 a share, compared with net income of $9.95 billion, or $14.21 a share, in the year-ago quarter.
• Revenue after removing traffic-acquisition costs declined to $31.6 billion from $31.7 billion in the year-ago period.

After the bell, shares in Facebook rose 8% and Amazon climbed 6% following their reports while Alphabet climbed 2%.

Lastly, the expiration of enhanced employment benefits on Friday weighed on sentiment today as US Congress was no closer to a deal that could extend or replace the extra $600-per-week in payments to tens of millions thrown out of work by the coronavirus.

Subsequently, the Dow Jones Industrial Average DJI fell 225.92 points, or 0.85%, to 26,313.65, the 500 SPX lost 12.22 points, or 0.38%, to 3,246.22.

The Nasdaq Composite bucked the trend and added 44.87 points, or 0.43%, to 10,587.81.

US dollar down for longer 

Meanwhile, the US dollar is under immense scrutiny, down 0.35% in the day.

• DXY: Dollar liquidity plentiful thanks to the Fed, markets increasingly bearish on US outlook

SP 500 Index levels