Picking up the Pieces… Get knocked down, get back up again! Ok maybe it’s a bit premature to say that US equities are already moving past the absolute bruising taken yesterday (and Monday), but the market’s outlook is at least a little brighter today with a once in a blue moon mega-earnings slate on its way after the bell (more below). That optimism was a little shakier this morning, as futures pared overnight gains and slipped into the red at one point, but solid Q3 GDP data and jobless claims were enough to get the ball rolling again (along with some ECB commentary on a “recalibration” of stimulus in December), despite the fact the Covid second wave is clearly going to be an ongoing concern. Though backward looking, the data does seem to help the market feel better about the lack of pre-election stimulus – just for good measure US indices barely reacted to Trump’s mid-morning promise of “a very big package as soon as the election’s over” (that you Santa?). US indices are now at their sprinting higher heading into the afternoon, led by Tech and Media (again, earnings on the way), as well as Transports and Autos which are repairing some of yesterday’s damage as Ford (F +3%) and Aptiv (APTV +5%) both easily beat expectations. Pharma and Healthcare are lagging, with a disappointing outlook from Abiomed (ABMD -8%) the most noticeable culprit. Energy is faring well (Exxon higher by +3.7% after announcing job cuts) even as Crude continues its tumble – it’s especially interesting to note as many pointed to Oil early in the year as an indicator of the Covid damage that would come…

Back on Your Feet…. It’s not quite a Turnaround Tuesday, but US stocks are holding their own in the aftermath of yesterday’s bout of repositioning. A full slate of earnings and some M&A developments have provided a handy distraction for investors with only a week until the election and stimulus still a question mark, though trading has been choppy and the S&P hasn’t strayed too far from its flatline in either direction. It’s not surprising the buy-the-dip crew is sitting tight for the most part given the timing, but it remains to be seen if the mega-cap earnings ahead force investors off the sidelines. Already the big guys (AMZN +2.1%, FB +2.3%, AAPL +1.1%) are showing some subtle signs of FOMO today as NYFANG+ makes a new relative high vs SPX (chart below) and with MSFT (+1.9%) set to dish after the bell (why did they have to spoil the perfect 5/5 FAAMG lineup on Thursday?). After all, yesterday’s SAP blowup was a reminder of 2 things: 1) There is no alternative to the US, and 2) Covid isn’t going anywhere… So it’s easy to see why some are convinced the winners will keep on winning (notice PTON +2.3%, ZM +1.4%, DOCU +1.2%)

Keep Those Shoulders Warm…. There’s been so much to shrug off today that investors’ shoulders must be tired. Foreign interference in the election, jobless claims data, rising Covid cases, earnings galore… the list goes on, yet indices are not far from unchanged as focus remains stubbornly fixated on stimulus negotiations (though UST yields are on the move higher again). A few murmurings of progress were enough to pull stocks off morning lows, but we’re now back in wait and see mode (my guess is more waiting than seeing to come). Also plenty more to see and hear tonight as Biden and Trump square off in a final debate, but it’s interesting to note how little anticipation there seems to be for the event at this point in the race (and after the first one). Banks are leading after some more earnings pops from the regional banks (HBAN +6.6%, MTB +5.3%, KRE +9% since last Wed), with Financials also in the green with Goldman Sachs (GS +1.4%) seeing some relief from its 1MDB settlement despite the massive price tag. Telecoms are higher at AT&T (T +5.7%) rang up some wireless gains and Energy is outperforming as Oil fights to partially regain yesterday’s slide. Kimberley Clark’s q3 (KMB -4.5%) disappointment is dragging Household Goods; Transports are lower as CSX (+3.8%) and Union Pacific (UNP -5.8%) presented dueling outcomes for the freight cos and as airlines gained despite American (AAL +2.8%), Alaska (+3.2%), and Southwest (LUV +5.1%) adding to the parade of quarterly losses.

3 O’Clock, By the Flagpole… Markets are waiting on bated breath for what’s essentially been billed as a final showdown between Pelosi and Mnuchin at 3pm EST that marks the last chance to get a stimulus bill passed ahead of the election only 2 weeks away. US stocks have been characteristically positive ahead of the showdown, and all 3 indices moved higher midday after Pelosi told BBG TV she is “optimistic” (never heard that one before). Apparently Fed heads aren’t convinced: Charles Evans admitted he is “nervous” fiscal stim won’t come but reassured that the Fed can do more if necessary, sending stocks to fresh intraday highs (though coming off a bit over the last 15 minutes). Plenty of single stock movers are helping to dictate sector moves, not all of them earnings related: in fact Autos are the best S&P performer as towed higher by General Motors (GM +8.3%) after announcing it will invest an additional $2bn into EV production. Banks are also higher powered by earnings beat from Comerica (+7.4%) and Regions Financial (+6.3%), helping solidify Value outperformance over Growth (VLUE +1.1, MTUM +0.6%). On the other side of that equation, IBM’s (IBM -5.9%) sales decline and lack of outlook have weighed on Software, and a less enthusiastic second look at Intel’s memory unit sale chipped away at Semi’s ytd gains. Defensives Food/Bev (Philip Morris vape shipments disappointed [PM -4.3%]) and Telecoms round out the laggards.

Everyone Remain Calm… Apparently the S&P posting its first consecutive down days in a month was enough to ruffle some feathers, as US indices are lower once again on the heels of a somewhat ugly red day across the rest of the globe. With regard to the main narratives the market has been watching (stimulus, Covid, economic recovery, election) nothing has drastically changed, but that itself doesn’t bode well for a pre-election fiscal injection as the Nov 3 countdown clocks ticks and the virus situation continues to look incrementally worse in Europe. Still the damage in the US today remains limited (S&P only back to last Friday’s levels) and some profit taking can be excused when stocks are near their all-time highs in the middle of a pandemic-fueled recession. It’s premature to say this is the start of a real “wakeup call” as opposed to a pause for thought, and it’s precisely at these moments of doubt that FOMO is at its most potent. Banks are making a guest appearance near the top of the sector chart after taking an earnings season beating the last few days, along with its more successful cousin Financials, which have charted a smoother path by delivering the beats, today coming from Morgan Stanley (MS +1.1%) and Charles Schwab (SCHW + 3.6%). The Transport space remains a tug of war zone between red hot shipping/logistics players (JBHT +1.4%) and the airlines, weighed upon today by another depressing earnings report form United (UAL -4.4%). Pharma is worst performing; Vertex (VRTX -20%) is patient zero there after stopping development of a promising rare disease drug. The usual high flyers Software, Media, Tech are also lagging as the FANG endures some selling… but with indices pushing new highs on the day, it would only take a little buy the dip action in those names to sneak out a surprise green finish for the S&P…

Let the Games Begin… There’s something for everyone today, with the earnings kickoff presenting a range of reactions, Apple (AAPL -3.4%) in the midst of presenting its latest iPhones (just taken a big leg lower), and Amazon (AMZN -0.4%) flexing its muscle through its Prime Day sale. Not to mention stimulus headlines, vaccine news, a Supreme Court nomination hearing, and the election only 3 weeks away (plus the rare sight of NFL football on a Tuesday set for tonight). While facing a whirlwind of information, indices appear much more subdued on the surface vs yesterday’s helium-like rise. The S&P has been modestly lower throughout the day, and the Nasdaq moving between positive and negative territories, with expectations tempering from McConnell and Pelosi after the EU close weighing a bit. Banks are the worst performing group: at Citi (C -4.4%) and JP Morgan (JPM -1.7%) initially garnered a positive initial reaction to solid beats on Investment Bank revs and lighter than expected credit loss provisions, but both banks warning of a slow road to economic recovery dampened the reception. It could be worse though, just ask struggling airlines which are dragging on Transports after Delta’s (DAL -2.1%) results disappointed and it delayed $5bn in aircraft deliveries. Cap Goods are lower too as Fastenal (FAST -4.1%) saw sales growth slow as demand for safety supplies dwindled. Blackrock (BLK +4.2%) fared better as AuM swelled to a record (though Financials as a group are lower) and Johnson&Johnson (JNJ -2.5%) saw its beat and raise overshadowed by the pause to its vaccine trial. Amazon has kept Retail buoyed in the green (at least before just now rolling over with Apple), as has Disney (DIS +3.8%) for Media after announcing a restructuring to shift more focus to its streaming business. So that’s the long version of what’s driving markets today, but…

What’s the Word, Jerome?… We delayed this View by a few minutes to accommodate the 2pm release of FOMC minutes, but the transcript delivered few surprises, and indices remain at the highs of the day along with Treasury yields. As expected, FOMC members agreed that economic activity has picked up (back to about 3/4ths of pre-pandemic levels) but concern remains that fiscal support is needed. Interesting to note that some members didn’t see the need for enhanced forward guidance, and that the guidance is not an “unconditional commitment”… that suggests rates don’t necessarily have to stay near zero for as long as currently forecasted. Still, we’re seeing little reaction from the market.

UPDATE: 2pm Strikes… And stocks go lower just before I hit send on the View (procrastination pays off?). Anyway, stocks have dropped fairly sharply over the last few minutes as word broke the House will go forward with a vote on the Democrats’ proposed stimulus bill even without gaining Republicans’ support (thus it won’t pass the Senate). The S&P is now hovering barely in the red while the Nasdaq has held onto gains relatively well. The sector outperformers/underperformers described below still hold true relatively speaking, just on a lower absolute level (sadly the Green Day pun does not…)

September’s Not Over Yet… Yesterday’s “buy everything” session sparked hope for a more positive conclusion to what’s been a month to forget, but US stocks are once again finding themselves on the receiving end of an uncomfortable reality check. It seems any month-end/quarter-end boost has quickly evaporated, and a combination of alarming series of Covid headlines and an alarming lack of stimulus headlines have put a negative spin on what was at first looking to be a fairly flat day ahead of the first Presidential debate tonight. Still the S&P has mostly held yesterday’s low (3333) and is now attempting to reclaim some losses as 2pm nears. Defensive sectors like Food Retail, Utilities, and Healthcare have fared relatively well, but have been surpassed by Semis which are now leading the Nasdaq back into positive territory as they manage to stay hot with Micron (MU +2.5%) earnings coming after the bell. The risk-off tone has the losers losing once again, with Banks giving back a chunk of yesterday’s gains and Energy the biggest laggard as crude plunges through its 100d moving average

I Heard You the 10th Time… It seems Turnaround Tuesday wasn’t packing much staying power, as stocks are continuing to slide into the afternoon as Monday’s nervousness is rearing its ugly head again. Commentary from Fed-heads is adding to the unease today. The message is same thing as it’s been the past few months: further stimulus is needed to complete the recovery, but that it’s on the government to step up this time (in Powell’s words, the Fed has “done basically all of the things that we can think of”).