Reuters News - Wall Street slumps as tech stocks slide, COVID cases jump

 (Reuters) - U.S. stocks fell on Friday, dragged down by a slide in shares of tech heavyweights following their quarterly results, with a record rise in coronavirus cases and nerves over the presidential election adding to a downbeat mood.

Apple Inc tumbled about 6% after it posted the steepest drop in quarterly iPhone sales in two years due to the late launch of new 5G phones.

Amazon.com Inc fell 4% after it forecast a jump in costs related to COVID-19, while Facebook Inc shed 3.5% as it warned of a tougher 2021.

Tech and consumer discretionary sectors posted the steepest percentage declines.

Communication services got a boost from a 5.7% jump in shares of Alphabet Inc after the Google parent beat estimates for quarterly sales as businesses resumed advertising.

“The market reaction today is more of where (the tech results) came in vs certain people’s expectations. Take a step back and look at the growth that these companies delivered, it’s pretty impressive,” said Pete Santoro, a Boston-based equity portfolio manager at Columbia Threadneedle.

“We’re two market days away from Election Day and people want to make sure that they’re not completely caught off guard.”

President Donald Trump has consistently trailed Democratic challenger Biden in national polls for months, but polls in the most competitive states have shown a closer race.

Wall Street’s fear gauge held at a 20-week high ahead of the final weekend before Election Day on Tuesday.

At 09:50 a.m. ET, the Dow Jones Industrial Average fell 229.87 points, or 0.86%, to 26,429.24 and the S&P 500 lost 32.67 points, or 0.99%, to 3,277.35. The Nasdaq Composite lost 187.12 points, or 1.67%, to 10,998.48.

The S&P 500 and Dow were on course for their worst week since March as spiraling coronavirus cases in the United States push hospitals to the brink of capacity.

Third-quarter earnings season is past its halfway mark, with about 84.8% of S&P 500 companies topping earnings estimates, according to Refinitiv data. Overall, profit is expected to tumble 13.4% from a year earlier.

Twitter Inc slumped 18% after the micro-blogging site reported fewer users than expected and warned the U.S. election could impact ad revenue.

Under Armour Inc rose 6% as it forecast full-year revenue above analysts’ estimates, boosted by a surge in online demand for running shoes and other fitness gear.

AbbVie Inc gained 5% after the drugmaker posted better-than-expected quarterly earnings and raised its full-year adjusted profit forecast.

Declining issues outnumbered advancing ones on the NYSE by a 2.1-to-1 ratio; on Nasdaq, a 0.4-to-1 ratio favored advancers.

The S&P 500 posted two new 52-week highs and one new low; the Nasdaq Composite recorded six new highs and 30 new lows.

Reporting by Medha Singh and Shivani Kumaresan in Bengaluru; Editing by Arun Koyyur and Anil D’Silva

Our Standards: The Thomson Reuters Trust Principles.

BBC News - Government support 'essential' for UK economy, says IMF

 

The International Monetary Fund (IMF) has said continuing government support is "essential" for the struggling UK economy to recover.

The UK can afford it, and support is needed to see it through the coronavirus pandemic and the Brexit transition, the IMF said.

Coronavirus infections are climbing rapidly again in the UK and elsewhere.

The IMF said the coronavirus recession is likely to be more severe than it had predicted just a few weeks ago.

It said the second wave of coronavirus, Brexit uncertainty, rising unemployment and stress on firms' balance sheets would make for a more "muted" recovery than it forecast earlier this month.

Coronavirus recession

The IMF predicted that the UK economy would shrink by 10.4% in 2020, and partially recover in 2021, with growth at 5.7%. This was a downward revision from just a few weeks ago when it upgraded its forecast.

Britain can afford to ramp up its already massive spending push to counter the effects of the coronavirus pandemic, the IMF's managing director Kristalina Georgieva said.

• IMF upgrades 2020 economic forecast but warns of a slower 2021
• New government Covid scheme to pay up to half of wages

Invigorating growth as the pandemic subsides will take more spending, the IMF said.

The UK government should increase public investment and bolster welfare support for people who lose their jobs because of the crisis, she said.

The government has been supporting the UK through a number of initiatives, including the jobs furlough scheme that ends on Friday, to and be replaced by a different scheme.

"My main message today is that continued policy support is essential to address the pandemic and to sustain and invigorate a recovery," Ms Georgieva said in an online presentation alongside Chancellor Rishi Sunak.

"We welcome that the authorities have committed to deliver it as long as necessary to boost expectations and confidence. The policy space exists to do this," she said.

Mr Sunak welcomed the IMF report, which he said endorsed his economic policies and his warnings that there would need to be action in future to reduce borrowing.

"Let me be clear on what the Fund is saying today. It's right to support the economy in the short term, but over time - and in line with other major economies - we must get our public finances back on a sustainable path," he said.

The IMF said the government's "aggressive" policy response to the pandemic was one of the "best examples of coordinated action globally", and had helped to hold down unemployment and the number of firms going bust.

Nevertheless, economic output has "dropped dramatically", it said, and public and private debt levels are set to rise significantly.

The IMF has estimated that Britain is on course to rack up a budget deficit of 16.5% of gross domestic product this year, dwarfing the damage wrought on the country's public finances by the global financial crisis.

Ms Georgieva said fixing the public finances could not be ignored but should only happen "once the private sector has durably picked up steam".

IMF staff said increases in the rate and scope of major taxes would be almost inevitable.

The Treasury declined to comment.

Reuters News - Trump concedes no coronavirus relief deal before November 3 election

 WASHINGTON (Reuters) - President Donald Trump acknowledged on Tuesday that a coronavirus economic relief deal would likely come after the Nov. 3 election, with the White House unable to bridge differences with fellow Republicans in the U.S. Senate as well as congressional Democrats.

“After the election we’ll get the best stimulus package you’ve ever seen,” Trump told reporters at the White House before leaving on a campaign trip.

Trump and House of Representatives Speaker Nancy Pelosi have traded blame for the impasse over another large stimulus package worth around $2 trillion to help Americans weather the pandemic.

“We’ll always talk about it because our people should get it, the stimulus, but Nancy Pelosi is only interested in bailing out badly run, crime-ridden Democrat cities and states,” Trump said.

Pelosi, the top elected Democrat, led the House to pass a $3 trillion coronavirus relief bill in May, but Republicans who control the U.S. Senate balked at another large bill. They pushed a much smaller measure targeting a few areas for relief.

The White House has said aid to state and local governments has been the main sticking point in the talks, while Democrats also cited the lack of a national coronavirus testing plan.

“In all of our legislation, we have stressed the importance of testing, but the administration has never followed through,” Pelosi wrote in a letter to lawmakers on Monday. “The Republicans’ continued surrender to the virus – particularly amid the recent wave of cases – is official malfeasance."

Infections are surging again in the United States and 36 out of 50 states have seen an increase for at least two weeks in a row, according to the Reuters analysis. Deaths from the respiratory disease have also more than doubled in seven states.

On Monday, Pelosi’s spokesman said she was hopeful an agreement could be reached before the elections.

But the White House on Tuesday morning began tamping down expectations for a major package to be agreed upon by next Tuesday’s presidential and congressional elections.

“The chances are slim,” White House spokeswoman Kayleigh McEnany said on Fox Business Network.

Reporting by Steve Holland, Doina Chiacu, Susan Heavey; Editing by David Gregorio and Grant McCool

Our Standards: The Thomson Reuters Trust Principles.

BCC News - Coronavirus: Local lockdowns 'stifling jobs recovery'

 Deserted High Streets and home working are stifling the British job market's recovery, new research suggests.

Urban areas in Scotland and southern England have seen the biggest declines in job postings, according to the Centre for Cities (CfC) think tank.

Vacancies have failed to return to pre-pandemic levels across all 63 towns and cities it analysed across the UK.

CfC boss Andrew Carter said local lockdowns, while necessary, will exacerbate the situation over winter.

The slow jobs recovery is linked to a "collapse" in the number of jobs in services being advertised, CfC said.

Aberdeen, where the oil industry has struggled during the pandemic, recorded the steepest fall, with a 75% decline in job vacancies at the beginning of October, compared to the same time last year.

It is followed by Edinburgh at 57%, and both Belfast and Crawley, a West Sussex town near Gatwick Airport, at 55%.

London has seen the sixth biggest fall in job postings at 52%. Overall, UK vacancies are 46% behind last year's level, said the report from the think tank and jobs website Indeed.

Andrew Carter, chief executive of Centre for Cities, said: "This could have potentially catastrophic long-term consequences for people and the economy.

"The government has told us to expect a tough winter and while local lockdowns are necessary to protect lives, it is vital that ministers continue to listen and reassess the level of support given to help people and places to cope with the months ahead."

'Long winter' for unemployed

The think tank's analysts said in general, the lag in hiring was concentrated in sectors exposed to Covid-19 restrictions, such as retail, arts and leisure. Stricter coronavirus rules are now in force for nearly six million Britons.

They also said working from home was stifling industries which depended on High Street footfall.

Areas where footfall has returned to normal more quickly, such as Birkenhead, Chatham and Hull, have seen a faster recovery in the number of jobs advertised.

Pawel Adrjan, UK economist at Indeed, said: "The timid recovery in job vacancies is a portent of the distress towns and cities could face if restrictions continue to spring up in parts of the country already reeling from imposed lockdowns and reduced footfall."

• How many people are out of work?
• How to get a job: Top bosses share their secrets
• 'I didn't want to tell anyone I was claiming benefits'

"With the remote work trend showing no sign of abating, and entire regions being placed under stricter control, service jobs in large towns and cities could become scarcer still and pull the UK into a jobs spiral," Mr Adrjan said.

"That could mean a very long winter ahead for the millions of people currently unemployed," he added.

The UK unemployment rate stood at 4.5% in the three months to August - the highest level seen in over three years.

According to the Office for National Statistics, an estimated 1.5 million people were out of work and job hunting between June and August.

A spokesperson for the Treasury said it had put in place a comprehensive plan to protect and create jobs in every region of the UK, and increased the generosity of its winter support schemes.

"We are also providing additional funding for local authorities and devolved administrations to support local businesses," they added.

BBC Neglect - Brexit: Michel Barnier arrives in UK as trade talks restart

 The EU's chief negotiator has warned that time is running out to strike a post-Brexit trade deal, as talks resumed after a week-long standoff.

Arriving in London, Michel Barnier said "every day counts," ahead of face-to-face negotiations with his UK counterpart Lord David Frost.

Officials from both sides will hold "intensified" daily talks in the run-up to December's deadline for a deal.

No 10 has warned "significant gaps" remain in the most difficult areas.

Negotiations stalled last week after a summit in Brussels where EU leaders called on the UK to "make the necessary moves" towards a deal.

But the UK side agreed to resume talks after Mr Barnier said "compromises on both sides" were needed, in a speech on Wednesday.

• UK 'ready to welcome EU' to continue trade talks
• Trade talks are back on - but what's changed?
• What are the sticking points in Brexit trade talks?

Both sides are seeking an agreement to govern their trading relationship once the UK's post-Brexit transition period ends in January 2021.

Key areas of disagreement include fishing rights, post-Brexit competition rules and how any deal would be enforced.

Arriving in the UK, Mr Barnier told reporters it was "important to be back at the table", and the two sides shared a "huge common responsibility".

Earlier on Thursday, the prime minister's official spokesman also acknowledged "time is now very short" for the two sides to reach a deal.

Format for talks

In line with a demand made by the UK, both sides will resume talks on all subjects based on proposed legal texts prepared by officials.

They have also agreed that "nothing is agreed" until progress has been reached in all areas - which has been a key demand of the EU.

An "initial phase" of face-to-face talks will run until Sunday, with subsequent negotiations planned in both Brussels and London.

These later talks could either take place in person or be held via video link if Covid restrictions apply, if both sides agree.

You could be forgiven for thinking that what we've witnessed over the past few days is a bit of political theatre.

Cover for the government - post chest-beating- to return to the negotiating table where they know the time has now come for tough compromises to be made.

EU leaders also went out of their way to sound tough on Brexit at their summit last week. Privately, a number of EU figures now admit it was a misstep.

But EU leaders play to the domestic gallery too. They wanted to show they were "standing up to the UK" - that leaving the EU doesn't pay and that EU interests would be defended.

Read more from Katya here

The two sides have been at odds over the issue of so-called "state aid" rules, which limit government help for industry in the name of ensuring fair economic competition.

The UK has rejected an EU demand made earlier in the year for it to continue following the bloc's rules on such subsidies as part of a trade agreement.

Lord Frost has suggested the UK could instead agree "principles" for how subsidies are spent - something welcomed by Mr Barnier on Wednesday.

The two sides are also haggling over how much European fishing boats should be able to catch in British waters from next year.

The EU has so far resisted UK demands for annual talks to decide stock limits, as well as a reduction in access for its vessels to British fishing grounds.

Transition deadline looms

By remaining in the bloc's single market and customs union, the UK has continued to follow EU trading rules during its post-Brexit transition period.

This 11-month period is due to end in December, and the UK has ruled out seeking an extension.

Formal talks began in March and continued throughout the pandemic, initially via video link before in-person discussions resumed over the summer.

If a deal is not done, the UK will trade with the EU according to the default rules set by the Geneva-based World Trade Organization.