Stocks slip as stimulus talks eyed, Netflix falls nearly 7%, Bitcoin rallies

The major indexes finished in negative territory Wednesday after hovering near the flat line for much of the day. The Dow shed nearly 100 points, while the S&P 500 and Nasdaq Composite lost 0.2% and 0.3%, respectively. — Jesse Pound

Andrew Slimmon, a portfolio manager at Morgan Stanley Investment Management, thinks investors are so concerned about the election that they are overlooking signs of economic strength presented in the market.

“There are a lot of signals that are consistently showing the economy is breaking to the upside,” said Slimmon, highlighting the U.S. yield curve steepening, copper prices soaring, consumer discretionary stocks outperforming consumer staples and the strong gains in small-cap names.

“People are focused on the election; they’re focused on stimulus, but there are so many confirming signals that the economy is truly recovering,” said Slimmon. “That’s what the market is telling me.” —Fred Imbert

The major averages were up slightly with about an hour left in the session as congressional Democrats and the White House continued negotiations over new fiscal aid. The Dow traded 51 points higher, or 0.2%. The S&P 500 advanced 0.4% and the Nasdaq Composite climbed 0.5%. —Fred Imbert

Economic growth expanded at a “slight to modest” pace across the U.S. over the past seven weeks as consumer spending and residential real estate grew, according to the Federal Reserve Beige Book report released Wednesday. “Changes in activity varied greatly by sector,” the report stated, as all 12 Fed districts reported growth. Labor markets are “tight” as some workers remain reluctant to return to their jobs due to health and child care concerns. The report also said restaurant owners are worried about the onset of colder weather while banks fret over rising delinquency rates ahead. — Jeff Cox

Shares of AstraZeneca turned negative after the Brazilian health authority said a volunteer in a Covid-19 vaccine trial died, according to a report from Reuters. The stock was down about 1% after being positive earlier in the session. The University of Oxford, which is developing the drug with the company, said that an independent review showed no health concerns about the trial and that it would continue, according to Reuters. — Jesse Pound

Wall Street analysts expect a strong earnings report from Tesla after the bell on Wednesday but also believe the stock is overvalued, which is hurting its growth potential.

“In our experience, we’ve never seen a stock rise that much that fast with such little regard to past fundamentals,” Needham analyst Rajvindra Gill said.

“We remain impressed by the company but continue to believe it is fundamentally overvalued,” RBC analyst Joe Spak said. Shares of the company are up almost 2% in midday trading.

Pro subscribers can read more here–Michael Bloom

House Speaker Nancy Pelosi said in a MSNBC interview around midday that she hopes to resolve “appropriations piece” of the coronavirus aid bill later on Wednesday. White House Chief of Staff Mark Meadows said Tuesday evening that Treasury Secretary Steven Mnuchin and Pelosi had made “good progress” following their Tuesday’s talk. The two plan to negotiate again at 2:30 pm E.T. Wednesday. Major equity averages bounced off their lows following her comments.— Yun Li

The major averages gyrated between slight gains and losses around midday amid lingering uncertainty over negotiations for new fiscal aid. Around midday, the Dow was down just 20 points, or 0.1%. The S&P 500 and Nasdaq hovered just above the flatline. —Fred Imbert

Snap shares surged more than 30% after the social media company reported a surprise profit for the previous quarter. Those gains also lifted shares of fellow tech companies such as Alphabet, Facebook and Twitter. Deutsche Bank analysts wrote that Snap’s results implied a “bonanza for online advertising,” noting this bodes especially well for Twitter. —Fred Imbert

Bitcoin’s price rose almost 7% to trade at around $12,755 on Wednesday after PayPal announced it will allow users to buy, hold and sell cryptocurrencies, becoming the latest large financial services provider to show an interest in the space.

The company said in a press release that its new cryptocurrency service would launch in the U.S. in the coming weeks and will initially feature bitcoin, ethereum, bitcoin cash and litecoin. By early 2021, the company also plans to let customers use crypto to shop with its network of 26 million retailers. — Ryan Browne, Maggie Fitzgerald

Federal Reserve Governor Lael Brainard called Wednesday for more aid from Congress to combat what she termed a “highly uneven” economic recovery. The central bank official spoke amid a continued impasse between the White House and congressional Democrats on key issues regarding fiscal help. “Further targeted fiscal support will be needed alongside accommodative monetary policy to turn this K-shaped recovery into a broad-based and inclusive recovery,” she said. Brainard is the latest Fed official to call for additional fiscal support to buttress monetary policy assistance from the central bank. – Jeff Cox

Needham’s Laura Martin, who predicted an earnings and subscriber miss for Netflix earlier this month, said she has two main concerns about the stock going forward.

Pro subscribers can read about Martin’s reaction to the earnings report here. Shares of Netflix last traded down 5.5%. — Jesse Pound

Fiscal stimulus from Congress is unlikely to come through before Election Day, according to Goldman Sachs. While progress has been made on several issues, the most significant obstacles regarding aid to state and local governments and coronavirus liability protection for businesses remain, the firm’s economists said in a note. “Some of the biggest issues remain unresolved and a deal doesn’t seem particularly close,” Goldman economist Alec Phillips said. – Jeff Cox

Stocks fell slightly at the open on Wednesday as investors looked for updates on stimulus deal talks in Washington. The Dow Jones Industrial Average dropped 45 points. The S&P 500 ticked 0.08% lower. The Nasdaq Composite bucked the trend, rising 0.16% —. Maggie Fitzgerald

Treasury yields climbed on Wednesday, extending their move higher to test key resistance levels. The yield on the benchmark 10-year Treasury note climbed to 0.812% after closing above 0.8% for the first time since June in the previous session. The yield on the 30-year Treasury bond hit a four-month high of 1.652% on Wednesday. Yields move inversely to prices.

“The level we’re watching is the 0.90% level,” Matt Maley chief market strategist at Miller Tabak, said in a note. “A significant move above that level would take the 10-year yield above its trend-line from late 2018”

Meanwhile, the long-maturity 30-year rate has broken above its 200-day moving average, a widely watched momentum indicator. — Yun Li

• Bank of America upgraded Pinterest to buy from neutral.
• KeyBanc raised its price target on Peloton to $160 from $120.
• Morgan Stanley downgraded Slack to underweight from equal weight.
• Truist upgraded Snap to buy from hold.
• Raymond James upgraded Dave and Buster’s to strong buy from outperform.
• Goldman Sachs upgraded Pinterest to buy from neutral.

Pro subscribers can read more here. –Michael Bloom

Shares of Pinterest popped more than 8% in premarket trading on Wednesday after Goldman Sachs and Bank of America upgraded the stock with a buy rating. Both Wall Street firms pointed to strong earnings results from Snap as a good sign for Pinterest’s advertising demand.

“Our field checks, along with Snap’s 3Q results, suggest that advertiser demand strengthened over the course of the quarter, particularly for smaller platforms like Pinterest, Twitter, and Snap,” Goldman Sachs analyst Heath Terry told clients.

Goldman slapped a $61 per share price target on the stock, implying nearly 35% upside from its previous close. Bank of America raised its target to $58 per share.

Pinterest reports third quarter earnings on Wednesday, Oct. 28.

CNBC Pro subscribers can read more about the calls here. — Maggie Fitzgerald

Shares of iRobot fell slid more than 4% in premarket trading despite better-than-expected results for the third quarter. The company reported $2.58 in earnings per share and on $413 million revenue, both easily topping estimates from analysts surveyed by Refinitiv. The stock had risen sharply in recent weeks and was up more than 26% in October before the company announced its results. — Jesse Pound

Shares of AutoNation rose more than 6% after the auto retailer reported earnings per share that beat analyst expectations. The company posted a profit of $2.38 per share, topping a Refinitiv forecast of $1.65 per share. AutoNation also said its gross profit for used vehicles jumped 43% on a year-over-year basis. Earnings from new vehicle sales jumped 56% over the same time period. —Fred Imbert

Shares of Snap skyrocketed more than 21% in premarket trading on Wednesday on the back of an unexpected profit along with positive user and revenue growth for the previous quarter. Its adjusted earnings per share came in at 1 cent, versus an expected loss of 5 cents per Refinitiv. The company’s revenue also topped estimates. Meanwhile, Snap reported 249 million daily active users, up nearly 4% from the 238 million the company reported in July. — Yun Li, Salvador Rodriguez

Shares of Interactive Brokers slumped 2.6% in premarket trading on Wednesday following the online brokers disappointing third quarter earnings. The e-broker reported earnings of 53 cents per share, missing estimates of 55 cents per share, according to Refinitiv. Revenue came in at $548 million, above the $512 million forecast on the Street.

Account growth grew 47% year-over-year to 981,400 accounts with record cleared daily active revenue trades of 1.6 million.

“While other eBrokers have seen the increased trading activity experienced in 2020 be diluted by zero-commissions, IBKR has continued to benefit as its customers have chosen to ‘pay for trades’,” Piper Sandler’s Richard Repetto told clients. — Maggie Fitzgerald

Netflix traded more than 5% lower in the premarket after the streaming giant reported a profit and subscriber growth that missed analyst expectations. The company posted earnings per share of $1.74, well below a Refinitiv estimate of $2.14 per share. Global paid net subscriber additions, a key metric for Netflix, came in at 2.2 million. Analysts polled by FactSet expected subscriber growth of 3.57 million. This marks the third straight quarter in which Netflix earnings have missed analyst expectations. —Fred Imbert, Lauren Feiner