Markets
Technology
Tech Companies Drag NASDAQ’s Stock Down
Friday brought a downward slide in NASDAQ’s stock. As this week’s news of governmental authorities testing positive for COVID was a significant catalyst for the decrease in price of stocks, NASDAQ’s best performers, Tesla and Netflix, finished sharply lower than usual as well. Tesla, specifically, fell down by more than 7% this Friday. Given their high delivery numbers from the past week, it is shocking to witness such a significant price fall. Though Tesla failed to manage its stock price this time around, small one day drops like this are hard to be taken as a big deal by long term investors. On the other hand, Netflix lost almost 5% of its share value this Friday. A controversial new release made by Netflix might have caused more customers to leave than normal. Despite the dramatic fall in price, the overall view of Netflix’s stock has not changed according to analysts at the Bank of America. Tesla and Netflix’s fall in stock led to an overall 2% decrease in NASDAQ’s market index for this week.
Politics
Trump Gets the Coronavirus
Upon the news of President Trump testing positive for COVID, stock fell more than 1% overnight. Additionally, shares were down 1.4 percent at the beginning of trading in New York. However, the stock market has begun to rebound due to the strengths within the industrial and material companies sectors. While it is unlikely this news will have any long term impact on the stock market, it must be monitored as if this has any effect on the outcome of the election, it will become more significant than anticipated. This apprehension in the stock market due to politics is a reflection of the past year as many investors are incorporating political risk into their portfolios. Many investors have concerns about Democratic victories upon election because this will likely lead to an increase in corporate taxes and increased regulation. There is the additional possibility that Mr. Trump will reject the results of the election, sending the stock market into further turmoil. The Chief Investment officer for O’Neil Global Advisors, Randy Watts, explained the reason investors are hesitant as this situation “gives investors a lot of reason to pause and not commit new capital to the market until we’re a lot closer to the election being over.”
Oil
Oil Prices Struggle as Demand Remains Low and OPEC Supply Increases
The oil market is continuing to struggle as COVID- 19 has significantly decreased the prices and demand for this asset class. As of Friday October 2nd, analysts forecast another drop in oil prices as Brent and West Texas Intermediate are vulnerable to falling into the mid thirties. Fears of COVID-19 and reports on the rise of OPEC output released this Thursday caused WTI futures to fall 4.07% as the market is reacting to a huge oversupply. In a time where OPEC has committed to cutting back, Libya announced this week that they are returning to the market thus pushing oil production further from a market equilibrium. Oil companies are fearful of a second COVID-19 wave re-shutting down the economy, and a warm winter seems to be contributing to an even higher overall risk. With a warmer winter, the demand for heating oil is predicted to decrease along with the overall return in the oil market. However, OPEC is looking to delay the release of more oil until demand picks up or a colder winter prevails. However, as a result, companies like Royal Dutch Shell are looking to slash their costs of producing oil and are looking towards more renewable options for the future.
Law
CEO’s of Google, Twitter, and Facebook to testify in front of Congress ahead of the Presidential Election
Republican Congressmen have called the CEO’s to testify in an alleged censorship hearing on these large social media platforms. The companies in question are Facebook, Twitter, and Alphabet Inc. (parent company of Google). Members of the Republican party are challenging the highly controversial Section 230 of the communications act, which protects information service providers from civil liabilities if they chose to restrict or remove content they deem is “obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable”. Members of the GOP claim that these major FAANG companies are censoring conservative media content by abusing Section 230, which has implications of political bias in presidential elections and beyond. While Republicans want to reign in the effects of Section 230, Democrats want to expand the provision to allow for immunity for these information service providers to censor hate speech. The implications of this hearing are vast. Sitting just six days before the election, a win for either side could swing the tide of the election. Furthermore, a vote against the FAANG companies could spell a bearish run for the entire NASDAQ. Much will be decided during this election season, both economically and politically.
Banks
Banks Continue to Struggle in the COVID-19 Economy
On Monday, banks were hit hard in the markets with the biggest lenders down by more than 10%. Despite the fact the S&P 500 is already down 12% since February, it recently fell by an additional 7%. Low interest rates are continuing to decrease profits and the recent decrease in oil prices have caused small oil companies to have trouble repaying their loans and dividends. These oil prices fell as Saudi Arabia announced they would cut crude oil prices due to disputes over supplies with Russia causing small US companies to struggle in competing with their lower prices. Companies are continuing to delay borrowing and spending due to the economic recession leaving bank profitability at one of its lowest recorded points.
Written By: Pledges Aleena Chaudhary, Caitlyn Harmon, Clara Sipes, and Vedant Nair