US open: Stocks move higher as stimulus talks remain in focus
By Iain Gilbert
Date: Wednesday 21 Oct 2020
(Sharecast News) - Wall Street stocks moved higher after the bell on Wednesday as White House chief of staff Mark Meadows said Nancy Pelosi and Steven Mnuchin had made "good progress" on reaching a stimulus agreement.
As of 1530 BST, the Dow Jones Industrial Average was up 0.47% at 28,442.59, while the S&P 500 was 0.58% firmer at 3,463.15 and the Nasdaq Composite started out the session 0.73% stronger at 11,600.83.
The Dow Jones opened 133.80 points higher on Wednesday, extending gains recorded in the previous session 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.
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 posted a 55% drop in earnings for the third quarter, while Abbott Labs topped quarterly profit and sales estimates amid the Covid-19 pandemic and Verizon beat earnings expectations and increased its full-year guidance.
Whirlpool and Tesla will report earnings after the close.
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, governor Lael Brainard said more fiscal support was required from congress to address large parts of the US economy.
"The recovery remains highly uncertain and highly uneven - with certain sectors and groups experiencing substantial hardship. These disparities risk holding back the recovery," Brainard said. "Further targeted fiscal support will be needed alongside accommodative monetary policy to turn this K-shaped recovery into a broad-based and inclusive recovery."
Elsewhere, Federal Reserve Bank of Cleveland President Loretta Mester said the central bank's new approach to monetary policy should help it influence the economy at a time when interest rates and inflation are low, but cautioned that policymakers needed to be cautious of financial stability risks.
"While monetary policy that leads to a stable macroeconomy encourages financial stability, it is also possible that in an environment with low neutral rates, a persistently accommodative monetary policy could, in some cases, increase the vulnerabilities of the financial system," Mester said.
Still to come, the central bank's Beige Book will be published at 1900 BST.
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