Disappointing unemployment figures, a crisis package in the blue and the EU’s fight against the technology giants weighed on Wall Street on Thursday. But a statement from Trump gave the market a boost.
Wall Street was set to continue its downturn on the third day on Thursday after US Treasury Secretary Steven Mnuchin said on Wednesday it would be difficult to land a crisis package before the election.
The US stock markets responded as expected with red arrows and were down above the percentage in the first hours after opening.
When Wall Street closed, much of the fall had been recovered on the leading indices:
- The Dow Jones closed down 0.06 percent.
- The S&P 500 closed 0.15 percent.
- Nasdaq closed down 0.47 percent.
Trump: – Not us who hold it back
The comeback can probably be partly attributed to Donald Trump.
On Thursday, Trump was interviewed by Fox Business, where he says that it is the Democrats who are preventing the crisis package for the economy ahead of the election.
“We are not holding it back, she is holding it back,” Trump said of Democrat Majority Leader Nancy Pelosi in the House of Representatives.
According to Bloomberg, Pelosi will be in talks with Finance Minister Steven Mnuchin during Thursday about the crisis package, which is intended to counteract the effect of the covid-19 pandemic on the US economy.
According to Bloomberg, the Democrats wanted a crisis package worth 2,000 billion dollars, and Pelosi has said that the Republicans do not take the effect of the virus seriously.
“I will definitely go over $ 1.8 trillion,” Trump told Fox.
Heavy for tek
The tech-heavy Nasdaq index fell the most on Thursday.
The tech shares were expected to go on a rampage after France and the Netherlands announced a legal battle against the technology giants’ power in the market, writes the Financial Times.
France’s digital minister Cedric O and his Dutch counterpart Mona Keijzer have signed a call for EU lawmakers in Brussels to take swift action against growing technology companies and existing platforms.
According to FT, there may also be talk of breaking them up.
Among other things, the ministers want the EU to explore whether they can force Facebook and Apple to let users bring their private data to competitors, or to ban companies like Google from highlighting their own services over smaller rivals.
In the United States, Twitter has been in bad weather for the past 24 hours after they censored a critical article about presidential candidate Joe Biden from the New York Post.
Disappointing figures from the labor market also contributed negatively.
The number of first-time applicants for unemployment benefits in the United States rose to 898,000 in the first week of October, which is taken as a sign that new outbreaks of the coronavirus in several states have affected employment. It writes MarketWatch.
The jump of 53,000 new social security applicants surprised several analysts, who had expected a smaller drop to 825,000.
Alerts swallow drop
And the fall can only be the beginning, says president and portfolio manager Cole Smead in Smead Capital Management.
To CNBC, he says that the valuation of American companies in the stock market has become a “complete nightmare” due to “young and stupid” investors.
Smead believes much of the stock market rise in the US from March to August is due to the technology giants and over-optimistic youth.
– The shopping party that took place in August and September is one […] phenomenon we have never seen before, among “millennials” and in the risk-taking among young people who do not want to own bonds and who want to own overpriced American quality companies, it is in enormous proportions, said Smead during CNBC’s program Squawk Box Europe.
Smead also believes that the valuation of the companies is currently an example of a major error in the stock market, which is driven by young investors who are speculating in the stock market for the first time. Therefore, there is a chance of a swallow for Wall Street, the analyst believes, adding that the US Federal Reserve “can not save a stock market”.