(26 November 2020)DAILY MARKET BRIEF 1:Wall Street Retreats, US Market to Be Closed on Thanksgiving

(26 November 2020)DAILY MARKET BRIEF 1:Wall Street Retreats, US Market to Be Closed on Thanksgiving

26 November 2020, 12:03
Jiming Huang

US equities retreated on Wednesday after three bullish sessions in a row that pushed the indexes to new records. Still, Nasdaq managed to close higher. Investor sentiment has turned gloomy after the US reported on its initial jobless claims, which showed that the economic recovery leaves to be desired. The fresh lockdown measures will continue to weigh on the labor market.

The S&P 500 fell 0.16%, the Dow lost 0.56%, while Nasdaq rose 0.47%, as tech stocks are usually resistant to pandemic-related news. Out of the 11 major sectors of the S&P 500, 7 closed in the red, with energy being the worst performer. The banking sector fell by 0.7%.

The markets in the US will be closed on Thursday in observance of Thanksgiving Day. This can also explain the retreat, as investors took profits before the holiday.

The Labor Department said that initial applications for unemployment benefits rose to 778,000 last week, exceeding expectations of 730,000 claims. The previous reading was also revised upward by 6,000 to 748,000, after it already grew more than expected. The data reflects the economic slowdown amid the resurgence of COVID-19. The department confirmed that the GDP had expanded by a record 33.1% in the three months to September, which is still a bit lower than expected.

In individual corporate news, Tesla issued two recalls of about 9,500 cars to fix the roof trim that may fall off white driving and tighten the loose bolts. The larger recall covers over 9,100 Model X cars produced in 2016. Despite the news, Tesla stock gained another 3.5%, as investors await the stock to be introduced in the S&P 500 index next month. Meanwhile, documents submitted by Musk’s EV maker to Shanghai authorities show that the company plans to begin manufacturing chargers in China starting in 2021.

Salesforce is about to acquire Slack Technologies, which operates a business communication platform. Slack surged almost 40% following the news. For Salesforce, this will be the biggest acquisition ever.

Amazon Web Services experienced an outage that forced many businesses to warn clients about product disruptions.

ViacomCBS announced that it would sell publishing company Simon & Schuster to Bertelsmann’s Penguin Random House for about $2.2 billion.

Despite the retreat of US equities, Asian stocks are mostly bullish in early trading on Thursday.

At the time of writing, China’s Shanghai Composite is up 0.02%, while the Shenzhen Component has dropped by 0.66%, though it is rebounding from session lows.

Hong Kong’s Hang Seng Index is up 0.19%.

Japan’s Nikkei 225 closed 0.96% higher. South Korea’s KOSPI is up 0.85%, after the Bank of Korea maintained its key interest rate unchanged at 0.50, in line with expectations. The country is experiencing a surge in coronavirus cases, with 583 new cases reported on Thursday.

In Australia, the ASX 200 closed 0.70% lower.

European stocks will open higher as futures are currently bullish on all markets within the bloc.

By Strategy Desk

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