Plus, the tussle over a stimulus deal continues, Morgan Stanley delivered an earnings beat, and Fastly shares plummet after delivering downbeat third-quarter guidance.
Stocks were lower to start Thursday with the Dow falling 265 points, or 0.9%. The S&P 500 slid 1.1%, while the Nasdaq traded 1.5% lower.
After making a stimulus deal seem out of reach yesterday, Treasury Secretary Steven Mnuchin said this morning that the White House won’t let differences over funding targets for COVID-19 testing derail negotiations with top Democrats. “That issue is getting overblown,” Mnuchin said. “We’ve agreed to $178 billion overall for health. It’s an extraordinary amount of money. We’d agreed with the Democrats with $75 billion going to testing, contact tracing. What we have been focused on is the language around testing. When I speak to Pelosi today, I’m going to tell her that we’re not going to let the testing issue stand in the way. We’ll fundamentally agree with their testing language subject to some minor issues. This issue is being overblown.” Meanwhile, President Donald Trump said he would go over the $1.8 trillion offer Mnuchin put forth in a counter to Democrats’ $2.2 trillion proposal. “Absolutely I would” go over $1.8 trillion,” Trump said today. “I would say more. I would go higher. Go big or go home, I said yesterday.” It remains to be seen if Mnuchin will put a bigger deal than the $1.8 trillion on the table when he speaks with House Speaker Nancy Pelosi today.
As Republicans and Democrats continue to tussle over stimulus, jobless claims unexpectedly rose last week, hitting the highest level since mid-August. Initial unemployment claims rose to 898,000 for the week ended October 10, while economists had expected a reading of 830,000. Continuing claims fell 1.17 million to 10 million in the week ended October 3, the Labor Department said, though that may partially reflect people exhausting state aid and moving to Pandemic Emergency Unemployment Compensation, the federal program that provides up to 13 additional weeks of jobless benefits. “While the number of continuing claims continued to decline, that positive trend continues to be partly offset by a rise in the number of individuals who have exhausted regular benefits, further evidence of more long-lasting scarring effects from the pandemic,” said Oxford Economics lead U.S. economist, Nancy Vanden Houten. “Failure to pass additional fiscal relief measures poses considerable downside risk to the economy. Failure to provide more relief raises the risk that some individuals will lose benefits altogether at the start of 2021.”
As U.S. coronavirus cases rise to more than 7.9 million, Dr. Anthony Fauci said letting the deadly virus rip through the nation’s population to infect as many people as possible to achieve so-called “herd immunity” is “nonsense” and “dangerous.” “I’ll tell you exactly how I feel about that,” Fauci, the director of the National Institute of Allergy and Infectious Diseases, said when asked about a herd immunity strategy. “If you let infections rip as it were and say, ‘Let everybody get infected that’s going to be able to get infected and then we’ll have herd immunity.’ Quite frankly that is nonsense, and anybody who knows anything about epidemiology will tell you that that is nonsense and very dangerous.” In other COVID-19 news, Sanofi said it is planning a clinical trial for an experimental coronavirus vaccine developed in partnership with Translate Bio after it elicited high levels of protective neutralizing antibodies in early-stage animal studies.
Morgan Stanley delivered a beat for third-quarter revenue and profit, fueled by better-than-expected results from its trading division. Morgan Stanley said profit in the quarter jumped 25% year-over-year to $2.72 billion, or $1.66 per share, exceeding the $1.28 estimated by analysts. The bank posted revenue of $11.7 billion, representing a 16% gain over the year prior. The trading division topped analysts’ estimates, driven by a 35% jump in fixed-income revenue, echoing similar results from JPMorgan, Goldman Sachs, and Citigroup. “We delivered strong quarterly earnings as markets remained active through the summer months, and our balanced business model continued to deliver consistent, high returns,” said CEO James Gorman in an earnings release.
And Fastly shares are down more than -24% this morning after the cloud provider shocked Wall Street with a weak read on third quarter revenue. Fastly issued a preliminary revenue range that was below its prior guidance due to lower usage by its largest customer, TikTok owner ByteDance, saying it now expects third quarter revenue of $70 to $71 million, compared to previous guidance of $73.5 to $75.5 million. “The current global environment has in some ways fueled our business, but [it] has also created areas of uncertainty,” Fastly CEO Joshua Bixby said in a statement. “While our preliminary third quarter results reflect the challenges of a usage-based model, we believe the fundamentals of Fastly’s business remain strong, as does demand for our platform.”
Stocks We’re Watching
Replimune Group Inc (NASDAQ: REPL): Replimune shares are up more than 10% this morning after the clinical-stage biotech announced that it will present encouraging “initial safety and efficacy data from the single agent RP2 portion of the Phase 1 clinical trial of RP2 alone and in combination with Opdivo (nivolumab) in patients with solid tumors” as well as “an update from the melanoma and non-melanoma skin cancer patients enrolled into the Phase 1/2 clinical trial of RP1 in combination with Opdivo” at the Society for Immunotherapy of Cancer annual meeting this month.