US stocks rebound as Trump appears to backtrack on stimulus

By CNN Business

Updated 6:50 p.m. ET, October 7, 2020
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4:18 p.m. ET, October 7, 2020

Consumer credit falls by $7.2 billion in August

From CNN Business' Anneken Tappe

Americans' debt balances fell at an annualized rate of 2% between July and August, data from the Federal Reserve showed this afternoon.

Consumer credit -- including personal loans, car loans and credit card debt -- amounted to $4.14 trillion in August, down from $4.15 trillion in the month before.

It was the first decline since April, and economists polled by Refinitiv had expected another increase.

In the midst of the pandemic lockdown in the spring, consumer credit had collapsed as people stayed home -- and then recovered as the economy reopened.

America's economy runs on consumer spending, which is often fueled by personal debt such as credit cards or car loans. A lower loan volume could mean people are spending less, which is bad news for the recovery.

4:05 p.m. ET, October 7, 2020

Stock end sharply higher

From CNN Business' Anneken Tappe

Wall Street closed sharply higher Wednesday on hopes that at least some isolated stimulus measures will come to pass before the election.

Stocks had tumbled Tuesday after President Donald Trump ended negotiations for another stimulus deal. The President later expressed his support for some measures, including stimulus checks and more money for the Paycheck Protection Program for small businesses, which led to a rebound in the market.

3:25 p.m. ET, October 7, 2020

Dow rallies nearly 600 points

From CNN Business' Anneken Tappe

With less than an hour left in the trading day, the Dow is at its highest point of the session, up nearly 600 points.

It's been a wild ride for investors this week, starting with President Donald Trump's release from the hospital Monday following his Covid-19 diagnosis. Then there was his abrupt announcement that he would end stimulus negotiations on Tuesday, and his subsequent backpedaling in which he said he would support isolated stimulus measures.

The latter had stocks jumping higher.

The Dow was up 585 points, or 2.1%, while the broader S&P 500 rose 1.9%.

The Nasdaq Composite was also up 1.9%.

2:41 p.m. ET, October 7, 2020

The Fed assumed more fiscal stimulus in its forecasts. Without it the outlook will likely be worse.

From CNN Business' Anneken Tappe

The Federal Reserve has emerged as one of the strongest proponents of more fiscal stimulus. Just Tuesday, Fed Chairman Jerome Powell warned of dire consequences if Congress failed to agree on another deal. Hours later, President Donald Trump ended negotiations.

While the central bank upgraded its economic outlook at its September monetary policy update, a survey of the the policy makers also showed that interest rates will remain near zero until at least 2023 to support the economy.

But now that an additional stimulus deal before the election is off the table, all of that is in question.

"Most forecasters were assuming that an additional pandemic-related fiscal package would be approved this year, and noted that absent a new package, growth could decelerate at a faster-than-expected pace in the fourth quarter," the Fed meeting minutes read on Wednesday.

Oh dear...

The Fed's median forecast for the unemployment rate at the end of 2020 is 7.6%, compared with 7.9% in September, with gross domestic product -- the broadest measure of the economy -- shrinking 3.7%.

1:55 p.m. ET, October 7, 2020

DraftKings sinks on stock sale and more NFL coronavirus cases

From CNN Business' Paul R. La Monica

DraftKings (DKNG) has been one of the biggest Wall Street success stories this year, soaring more than 200% since it went public via a blank check merger in April. But shares have sunk more than 14% over the past three days -- for two big reasons.

First, the red-hot sports betting company announced Monday that it would sell 32 million shares in a secondary offering. Investors often view these sales negatively because the flood of new shares can reduce the value for existing holders of the stock.

Making matters worse, DraftKings on Wednesday priced the offering Wednesday at $52 a share -- below Tuesday's closing level of $56.78. Shares fell 4% alone on Wednesday on the news.

On a secondary note, investors may be growing nervous about a rash of coronavirus cases in the National Football League after the New England Patriots, Carolina Panthers and Las Vegas Raiders reported more players tested positive for Covid-19.

Shares of DraftKings rival Penn National Gaming (PENN), the casino company that owns a big minority stake in Barstool Sports, have fallen this week too. The NFL is by far the most popular team sport to bet on.

1:12 p.m. ET, October 7, 2020

Markets expect a Democratic sweep, strategist says

From CNN Business' Anneken Tappe

It's just under four weeks to go until the presidential election, and the market is expecting a blue wave to wash over Washington.

"Anything could change, this is a really amazing electoral cycle," Alicia Levine told Alison Kosik on the CNN Business digital live show Markets Now.

But as of now, the betting markets are predicting a lop-sided outcome, "so the [stock] market is playing those stocks that would play will under a Biden administration"

A Biden administration is expected to launch more stimulus to boost the economic recovery and support the millions of American workers who have lost their jobs in the pandemic.

1:10 p.m. ET, October 7, 2020

The recovery could continue without stimulus, but people will be left behind

From CNN Business' Anneken Tappe

The economic recovery has slowed down in recent weeks. Experts, including Federal Reserve Chairman Jerome Powell, agree that more government spending is needed to get the country back on track.

On Tuesday, President Donald Trump ended negotiations for another stimulus deal until after the election.

That said, the recovery could chug along in the coming months, even without a stimulus deal, said Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, on the CNN Business digital live show Markets Now. But doing so would likely exacerbate the inequalities the crisis has already created.

At the moment, it's looking to be a K-shaped recovery, in which benefits from the rebound will help certain groups but not others. The recovery could continue without stimulus, but millions may be left behind.

"Higher earnings consumers have exposure to equities, have exposure to home prices, which are rising," said Achuthan.

But people who have lower incomes, especially those who work -- or used to work -- in the services sector, still need more help from the government. The US has lost 10.7 million jobs since February.

12:41 p.m. ET, October 7, 2020

Another 820,000 initial jobless claims expected tomorrow

From CNN Business' Anneken Tappe

We're coming up on jobless claims day Thursday, and once again economists expect only slight improvements as the recovery is running out of steam.

Another 820,000 first-time claims for unemployment benefits are expected in tomorrow's Department of Labor data. That would only be 17,000 fewer claims than in the week before. Not exactly a resounding improvement.

For continued claims, which count people who have filed for benefits for at least two weeks in a row, economists expect 11.4 million, down from 11.8 million in the prior week.

10:08 a.m. ET, October 7, 2020

It's rally o'clock

From CNN Business' Anneken Tappe

The market has been open for about half an hour and stocks are off to the races. After kicking off higher, we now have a full-on rally on our hands.

The Dow is up 1.3%, or 355 points, and the broader S&P 500 is up 1.1%. Phew. That's a turnaround. The Nasdaq Composite also climbed 1.1%.

But let's remember how this all came out: a lot of uncertainty about future fiscal stimulus.

And that's the point: uncertainty.

Investors have been shoved around by all this volatility in the past weeks (think the President's health, stimulus deals or no deals, as well as election jitters) and that will probably remain the case until the election in four weeks. Here's to stamina.