Dow Futures Slide As Stimulus Deadlock, Hard Brexit Concerns Cloud Vaccine Progress

The Friday Market Minute

  • Global stocks slip lower as Brexit concerns, as well as stalled stimulus talks in Washington, offset vaccine progress.
  • An independent panel of experts endorses the Pfizer/BioNTech vaccine, with the FDA expected to affirm EUA approval later today.
  • Prime Minister Boris Johnson and EC President Ursula von der Leyen warned that a hard Brexit is now more likely, although one last effort to secure a deal will be made Sunday.
  • U.S. lawmakers remain deadlocked on a coronavirus aid package worth around $1 trillion, with House Speaker Nancy Pelosi suggesting talks could continue past Christmas.
  • Disney shares surge after investor day outlines ambitious content and subscription strategy; Costco tops Q1 earnings thanks to online sales surge.
  • U.S. equity futures point to a softer open on Wall Street ahead of producer price inflation data at 8:30 am Eastern time and a December reading of consumer sentiment at 10:00 am Eastern time.

U.S. equity futures slipped lower Friday, extending Wall Street’s pullback to a third consecutive session, amid stalled stimulus talks in Washington and a potentially disruptive Brexit that offset progress in the FDA’s approval of the Pfizer/BioNtech coronavirus vaccine.

An independent panel of medical officials overwhelmingly endorsed the two-dose vaccine, which was given the nod by U.K. authorities earlier this week, and experts anticipate the Food & Drug Administration will make its final decision on emergency use approval for the Pfizer  (PFE) – Get Report/BioNtech  (BNTX) – Get Report vaccine later today. 

That progress, however, was muted by yet another deadlock in stimulus talks in Washington, where House Speaker Nancy Pelosi hinted yesterday that negotiations could carry on through Christmas, with her Democratic colleagues at odds with Republican lawmakers in the Senate over support for state and local governments as well as the level of COVID liability protections in the near $1 trillion aid package.

Meanwhile, U.S. coronavirus cases rose by 223,500 yesterday, according to data from Johns Hopkins University, as the worldwide total neared 70 million. The number of Americans filing for unemployment benefits, as well, jumped to 835,000 last week, taking the four-week average to just over three quarters of a million.

Britain’s pending exit from the European Union after nearly 50 years at the heart of the world’s biggest economic bloc was also weighing on sentiment in overnight trading as both Prime Minister Boris Johnson and European Commission President Ursula von der Leyen warned that a ‘no deal’ departure, which could cripple supply chains and disrupt financial markets, was now more likely than ever.

U.S. stocks are only modestly in the red this morning, however, with contracts tied to the Dow Jones Industrial Average indicating a 210 point opening bell decline and those linked to the S&P 500 suggesting a 32 point pullback.

Several big-name stocks were active in pre-market trading, as well, with Walt Disney Co.  (DIS) – Get Report rising nearly 8% to $167 per share after an investor day presentation that set out plans to boost global subscribers past 350 million over the next three years while spending $16 billion to add hundreds of new titles and original content.

Broadcom  (AVGO) – Get Report shares were also on the move, falling 2.7% after forecast-beating fourth quarter earnings and a management shake-up that was clouded by a muted outlook for enterprise sales of its network infrastructure equipment. 

Costco Wholesale  (COST) – Get Report, meanwhile, edged only modestly higher after it followed its big-box and discount rivals with stronger-than-expected quarter earnings of $2.35 per share, on sales of $43.2 billion, driven in part by a surge on online revenues and a 7% jump in customer memberships.

Airbnb Inc.  (ABNB) – Get Report shares were also in focus, slipping 1.9% from their Thursday close of $144.71, a level that valued the home rental platform at more than $100 billion on its first day of trading on the Nasdaq.

European stocks were notably weaker to close out the week, with the Stoxx 600 falling 0.86% in Frankfurt on concerns over Britain’s ‘hard Brexit’ likelihood and the softer-than-expected growth and inflation forecasts unveiled yesterday by the European Central Bank.

Global oil prices held firm, however, with Brent crude trading past the $50 mark for the first time since March as gains extended for a sixth consecutive week, boosted by OPEC’s decision to pare its 7.7 million barrels per day in production cuts by only 500,000 and the rollout of coronavirus vaccines in major economies around the world, which could spur energy demand.

U.S. crude prices were marked 1 penny higher from their Thursday close to trade at $46.79 per barrel, while Brent contracts for February delivery slipped 16 cents to $50.09 per barrel.

Overnight in Asia, Japan’s Nikkei 225 closed out the week 0.4% lower, for its first weekly decline in six, to end the Friday session at 26,652.52 points. The region-wide MSCI ex-Japan index, meanwhile, was marked 0.22% higher heading into the close of trading.