Brief: Stocks are falling on Wall Street in afternoon trading Thursday, extending the market's pullback this week as optimism that Congress will deliver another round of stimulus for the economy wanes and new data show another weekly surge in the number of Americans seeking unemployment aid. The S&P 500 was down 0.7%. The benchmark index is now on track for its first weekly loss in three weeks. The selling was widespread, with technology, health care and companies that rely on consumer spending driving the decline. The pullback follows a broad sell-off in markets overseas as rising infections in Europe led governments in France and Britain to impose new measures to contain the coronavirus. Treasury yields were lower, while the price for U.S. crude oil also headed lower. The Dow Jones Industrial Average was down 141 points, or 0.5%, to 28,379 as of 12:15 p.m. Eastern time. The Nasdaq composite dropped 1.2%. The Russell 2000 index of small-cap stocks was off 1%. Stocks have been mostly climbing this month, but have pulled back this week as talks between Democrats and Republicans in Washington over another economic stimulus package drag on, dimming investors’ hopes for a deal that can deliver more aid for the U.S. economy in the near term.
Brief: Investment managers should come together to provide high-quality work placements for 16-24-year olds on Universal Credit, Investment20/20 says, following the launch of a new initiative in support of the Government’s GBP2 billion Kickstart scheme. Investment20/20, the Investment Association’s talent solution for the industry, is encouraging investment managers to join its new initiative aimed at facilitating Kickstart’s six-month work experience for 16-24-year-olds on Universal Credit and at risk of long-term unemployment. As part of the scheme, Investment20/20 will act as a conduit for the Department for Work and Pensions (DWP) to pay the National Minimum Wage to each participant for 25 hours a week of work. Investment20/20 is providing an industry solution for investment managers looking to participate in the Kickstart scheme, by providing resources and support to young people with no background knowledge of the industry, and enabling firms to offer work placements to fewer than 30 young people - a requirement to engage with DWP directly.
Brief: Working from home hasn’t slowed down Wall Street’s trading desks. The five biggest U.S. investment banks are on pace for their first $100 billion year for trading revenue in more than a decade. In just three quarters, they’ve already generated almost $84 billion, more than any full year since 2010. Sell-side traders have ridden a wave of activity as markets plunged at the start of pandemic-spurred lockdowns before embarking on dramatic rebounds. Trading gains since the start of the pandemic have helped offset weakness in consumer businesses at the nation’s biggest banks, where loan-loss provisions piled up in the first half of the year. Capital markets units have “really been the bright spot as far as revenues have gone since the pandemic started,” Jeff Harte, a bank analyst at Piper Sandler, said in a Bloomberg Television interview. “It’s been pretty good earnings, at least from the big banks.” JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley all saw trading revenue surge more than 20% for a third straight quarter. The totals weren’t as staggering as the second quarter, which was a record for modern Wall Street’s trading and dealmaking units, but they helped lift Goldman to record per-share earnings and Morgan Stanley to its second-highest profit ever.
Brief: New research from RBC Global Asset Management shows that three out of four (75%) institutional investors now incorporate ESG principles into their investment process, up from 70% last year. An increasing number of institutional investors believe ESG integrated portfolios are likely to perform as well or better than non-ESG integrated portfolios compared to 2019, going up from 90% to 97.5% in Canada, from 92% to 96% in Europe and from 78% to 93% in Asia. However, while most markets are embracing ESG, investors in the US appear more sceptical. Only 74% of US respondents believe ESG integrated portfolios perform as well or better, down from 78% in 2019, while a quarter believe they perform worse. The coronavirus pandemic has helped boost interest in ESG, with investors becoming more aware of environmental and social factors. More than a quarter of institutional investors (28%) said covid-19 has made them place more importance on ESG considerations. Meanwhile, more than half of institutional investors are looking for companies to disclose more details about worker safety, employee health benefits, workplace culture and other social factors due to the pandemic.
Brief: Quantitative fund manager AJO Partners, which manages $10 billion, said on Wednesday it will shut at the end of the year after “lingering viability concerns” from its clients. Performance data on the fund's website here showed a number of its funds were down sharply for the year to Sept. 30, with its Large Cap Absolute Value strategy, which has more than $5 billion, down 15% and Small Cap Absolute Value down 21%.“Our relative performance has suffered because our investment edge, our “secret sauce,” is at odds with many forces driving the market,” founder Ted Aronson said in a memo provided by a company representative to Reuters. “However, the drought in value — the longest on record — is at the heart of our challenge.” Aronson wrote the length and the severity of the headwinds “have led to lingering viability concerns among clients, consultants, and employees.” Value stocks or shares of economically sensitive companies have been among the laggards in the market’s rally from its lows in March. Related sectors such as retail have struggled as their business models get disrupted in a shift to a more tech-driven world.
Brief: Wells Fargo & Co WFC.N has fired about 100 to 125 employees for unethically availing themselves of coronavirus relief funds, according to a source familiar with the matter. The bank believes some of its staffers made “false representations in applying for coronavirus relief funds for themselves”, defrauding the U.S. Small Business Administration, David Galloreese, head of Human Resources, said in an internal memo seen by Reuters. The abuse was tied to the Economic Injury Disaster Loan program and outside the employees’ roles at the bank, the memo said, adding Wells Fargo will cooperate fully with law enforcement. “These wrongful actions were personal actions, and do not involve our customers.” Bloomberg first reported the news earlier in the day. Last month, JPMorgan Chase & Co JPM.N dismissed several employees who allegedly misused funds that were supposed to help businesses dealing with the COVID-19 pandemic, the Financial Times reported.