CNBC/Yun Li and Fred Imbert
Dow futures drop 180 points as Wall Street gets set to end downbeat week, Apple falls on earnings
U.S. stock futures fell in early morning trading Friday after some of the technology heavyweights came under pressure following their quarterly reports.
Futures on the Dow Jones Industrial Average dropped 533 points. S&P 500 futures and Nasdaq-100 also traded in negative territory.
Shares of Apple fell more than 4% in extended trading after the tech giant reported a 16% decline in iPhone sales and failed to offer investors any guidance for the quarter ahead. Amazon dipped 1.87% even after the e-commerce giant reported blowout third-quarter results with a big beat on the top line.
Wall Street staged a modest rebound on Thursday on the back of better-than-expected U.S. gross domestic product and jobless claim data. The 30-stock Dow gained more than 100 points for its first positive day in five, while the S&P 500 rose 1.2% to snap a three-day losing streak. The tech-heavy Nasdaq Composite climbed 1.6%.
Still, major averages are on pace to post their worst weekly performance in months. The Dow is down 5.9% week to date, on pace for its worst week since March 20. The S&P 500 has fallen 4.5% this week, headed for its worst week since June 12.
Gold should be at $2,500 as Fed balance sheet hits record highs – CrossBorder Capital
In a telephone interview with Kitco News, Michael Howell, managing director at CrossBorder Capital, said that he expects it is only a matter of time before gold prices continue to push higher as governments and central banks around the world continue to pursue aggressive stimulus policies that increase the money supply, balance sheets and deficits.
Howell’s bullish outlook on gold comments come after data from the Federal Reserve recently showed that its balance sheet rose to a new record high above 7 trillion dollars.
“Balance sheet expansion is ultimately going to drive gold higher,” Howell said. “If you do long-term studies of monetary growth against gold, you will find there’s a very much a one-to-one relationship. As the supply of money or the supply of liquidity expands, the gold price tends to go up.”
Howell added that the Federal Reserve’s M2 money supply growth, the amount of paper dollars floating throughout the economy, has grown by about 30% this year. At the current pace of growth of the money supply, gold’s fair value is closer to $2,500, Howell said.
“In other words, gold is looking pretty cheap against the vast increase in liquidity,” he said.
Fox Business/Jonathan Garber
Exxon slashes 1,900 jobs, many at corporate HQ
Exxon Mobil plans to cut 1,900 U.S. workers as the oil giant navigates a sharp drop in demand caused by the COVID-19 pandemic, which has curtailed both office commutes and vacation travel.
The separations, many at the company’s Irving, Texas, headquarters, are both voluntary and involuntary, Exxon said in a statement on Thursday. Efforts to streamline operations, which many of its rivals are also engaged in, have become more urgent after the coronavirus spurred the worst downturn since the Great Depression, hammering oil prices.
“These actions will improve the company’s long-term cost competitiveness and ensure the company manages through the current unprecedented market conditions,” executives said in the statement.
Exxon, which is slated to report earnings for the three months through September on Friday, is expected to lose 25 cents per share, marking a third straight quarterly loss. Exxon CEO Darren Woods had warned last week that more job cuts were coming for employees in both the U.S. and Canada.
While the company has surpassed its targeted cuts, Woods said the COVID-19 pandemic and lockdowns intended to contain it have slashed oil demand by about 20%, five times the decline during the 2008 financial crisis.
CNN Business/Julia Horowitz
Record GDP won’t mean much to investors
The US economy probably grew at a record pace during the summer months. But investors are already moving on, fixating on fears that the recovery could stall or reverse heading into the end of the year as Covid-19 infections surge.
What’s happening: The first read of US GDP between July and September posts Thursday. Economists polled by Refinitiv expect GDP grew by an annualized, seasonally adjusted rate of 31%. Compared to the second quarter, the economy is forecast to have grown by about 7%. By either measure, that’s the fastest expansion ever.
Don’t expect that to impress Wall Street. For traders, who are always looking ahead, the third quarter is already old news — and what’s on the horizon is starting to cause real alarm.
On Wednesday, the Dow closed down 3.4%, or 943 points, while the S&P 500 shed 3.5%. It was the worst day for both indexes since June.
Behind the drop: Concerns are growing that coronavirus cases are getting out of control again in North America and Europe.
France and Germany, the two biggest economies in the European Union, have both announced harsh restrictions in response to spiraling case loads. France will close all non-essential businesses, restaurants and bars on Friday for four weeks. Germany is shutting restaurants, bars and clubs and instructing residents to stay at home starting Monday.