Wall Street heads for mixed start

After yesterday’s reverses, the Dow Jones and S&P 500 are expected to add to yesterday’s losses but the NASDAQ Composite is on the comeback trail. Spread betting quotes indicate that the Dow, which shed 85 points yesterday to close at 27,693, will open around 48 points lower at 27,645 while the S&P 500 is tipped to shed 4 points at 3,371. The NASDAQ Composite, fuelled by continued tech-mania, is seen rising 186 points to 11,332. Things have got so frothy in techland, Airbnb has revived plans to float, despite evidence of a second wave of coronavirus cases across the globe. Apple Inc (NASDAQ:AAPL), the iPhone maker, became the US’s first US$2,000bn company – that’s market capitalisation, not taxes paid (obviously) – this week, which partly explains the NASDAQ’s continued strength. “Apple’s $1trn rally in just 24 months is truly remarkable. Apple, like many tech stocks, has been largely insulated from the Covid-19 economic downturn - despite having to close stores because of the pandemic,” said Richard Hunter, the head of markets at interactive investor. “The burning question now for investors is how high can Apple go?” Hunter asked. “ A deep recession could spoil Apple’s bull run by knocking demand for its premium products like iPhones, iPads and MacBooks; however, Apple has a few strings to its bow and its services arm, which includes Apple Music and Apple TV, is likely to continue to be a revenue driver for the business regardless of whether the overall economy is growing or not,” Hunter added. “In addition, the US-China trade conflict remains a threat. Further escalation in the conflict could leave Apple, who are heavily reliant on Chinese manufacturing for products such smartphones, exposed.” Aside from the continued appetite for all things tech stock-related, the focus stateside is likely to be the minutes from the most recent meeting of the Federal Reserve’ policy-setting committee. “The Fed’s calm and measured stance in its most recent meeting was perhaps not enough for stock markets, which have certainly grown used to a rhythm of central bank actions, but the disappointment should not last long,” predicted Chris Beauchamp, the chief market analyst at IG. “The minutes should not be viewed in any hawkish light, but instead seen as a necessary pause for the central bank to reassess the outlook. Markets have been able to weather much bigger problems than a set of central bank minutes, with no indication thus far that the overnight weakness is about to turn into something more substantial,” he added. Milan Cutkovic, a market analyst at AxiCorp, was a bit less “glass half full”. “Talks between Democrats and Republicans over another massive corona aid package have stalled, and no imminent solution is in sight,” Cutkovic noted. “The comments from the Fed brought markets under pressure, as a V-shaped economic recovery is already priced in. “The reaction also shows that investors remain fairly edgy, despite - or perhaps because - of the impressive recovery rally. After several weeks of a smooth ride for stock markets, market participants should buckle up for another rollercoaster ride,” he added. “At the same time, the United States is increasing the pressure on Hong Kong by terminating three bilateral agreements. It will only be a matter of time before Beijing will see itself forced to take countermeasures, which could set in motion a dangerous downward spiral. “With the current uncertainties surrounding the pandemic, the timing for a return of the trade war between the two superpowers could hardly be any worse,” Cutkovic suggested. Five things to watch for on Thursday: Initial jobless claims data for the week ending August 15, which is expected to show 925,000 Americans filed for unemployment in the period, down from 963,000 in the previous week Any further details on potential US-China trade talks following comments overnight from the Chinese Commerce Ministry that discussions would be held “soon” Share price reaction from Chinese ecommerce giant Alibaba Group Holdings Ltd (NYSE:BABA), which topped earnings and revenue forecasts in its first quarter thanks to a boom in digital purchases during the pandemic Earnings data from fellow Chinese tech giant and social media platform Weibo Corporation (NASDAQ:WB) The final day of the Democratic Convention which will see former vice-president Joe Biden officially accept the party’s nomination to run for president in November’s general election