Here are the key news, trends, and analysis investors need to start their trading day:
1. Dow will rise again after the worst month of the year is over
Traders operate on the floor of the New York Stock Exchange (NYSE) in New York City on September 30, 2021.
Spencer Platt | Getty Images
The Dow futures rose more than 150 points on Friday, undoing an earlier sharp decline on the first day of October after the worst month of the year. The pre-market trading led to good study news on oral Covid treatment from Merck. The Dow Jones Industrial Average, which had outperformed the S&P 500 and Nasdaq during last week’s slump, suffered the largest decline on Thursday, down 1.6%. The S&P 500 lost about 1.2%. The Nasdaq, which rebounded somewhat from declining bond yields, lost 0.4%.
- In September the Dow fell 4.3%; the S&P 500 fell nearly 4.8%; and the Nasdaq lost 5.3%.
- In the third quarter, which also ended Thursday, the Dow lost 1.9%; the S&P 500 gained 0.2%; and the Nasdaq lost 0.4%.
- However, all three benchmarks were still solidly higher over the course of the year, with corresponding increases of around 10.6%, 14.7% and 12.1%.
- Historically, October saw some heavy sell-offs, but overall, it’s usually the start of better seasonal performance for stocks.
2. Merck applies for clearance for oral Covid treatment, stocks soar
The Merck logo can be seen on a gate to the Merck & Co campus in Rahway, New Jersey, USA on July 12, 2018.
Brendan McDermid | Reuters
Merck and Ridgeback Biotherapeutics plan to apply for emergency approval for their oral antiviral treatment for Covid after announcing “compelling results” in clinical trials. The Dow share Merck gained almost 9% on Friday before the trading session. The drug molnupiravir reduced the risk of hospitalization or death in patients with mild or moderate Covid cases by around 50%, the companies said on Friday. Molnupiravir is given orally and works by stopping the replication of Covid in the body. Pfizer is working on its own oral antiviral. Gilead Sciences’ antiviral remdesivir, which is administered intravenously, was approved for emergency use a year ago.
3. The measure of inflation, which the Fed uses to set policy, remains elevated
The yield on 10-year US Treasuries ticked lower on Friday and was around 1.5%. Earlier this week, the 10-year yield hit a three-month high of over 1.567%. The government on Friday released an inflation measure that the Federal Reserve is using to set monetary policy. The core consumer spending index rose 3.6% yoy in August, slightly above estimates and just as high as it was in July, which hit a 30-year high. Fed chief Jerome Powell said this week that inflationary pressures could last longer than expected, citing supply chain bottlenecks as a key factor.
4. Biden signs preliminary funding to prevent government shutdown
U.S. House Speaker Nancy Pelosi (D-CA) is flanked by members of the House Democratic Committee as she holds the rolling resolution she signed calling for a U.S. government shutdown during a ceremony to enroll a Avoid Bill on Capitol Hill in Washington on September 30, 2021.
Elizabeth Frantz | Reuters
Congress prevented the government from closing before Thursday’s midnight deadline. President Joe Biden signed a bill that will fund federal operations through December 3. The adoption of the so-called ongoing resolution averted a crisis. But lawmakers have yet to grapple with another: impending insolvency unless Congress increases or suspends the debt ceiling before October 18. Democrats, who control both the House and Senate, sought to fund the government and suspend the debt ceiling as part of the same bill. The Republicans in the Senate blocked the legislation, forcing the Democrats to meet funding needs first.
5. Biden cannot break the blockade of Dem, infrastructure coordination postponed
US President Joe Biden attends a press conference with German Chancellor Angela Merkel (not pictured) in the East Room of the White House in Washington, DC on Thursday, July 15, 2021.
Alex Edelmann | Bloomberg | Getty Images
Biden has failed to break a democratic stalemate that threatens his domestic political agenda. A group of progressive House MPs and two centrist Democratic senators were still miles apart on key issues late Thursday. House spokeswoman Nancy Pelosi originally scheduled a vote Thursday on a Senate-approved bipartisan infrastructure bill worth $ 1 trillion, but postponed it because she did not have the required votes. House progressives are concerned as they pass the infrastructure bill advocated by the moderates.
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