US shares sank after midsession on Friday and closed lower, following revelations the Federal Bureau of Investigation will probe presidential candidate Hillary Clinton’s private emails.
FBI director James Comey said the FBI was launching a fresh probe into newly discovered emails from Clinton in an “unrelated case”, but stopped short of saying he was reopening the formal investigation he concluded in July. He also said it was uncertain how long the fresh probe would take nor did he state whether the new emails were “significant”, a trigger for reopening the investigation.
A closely-watched measure of expected volatility in the US equity market shot up as a result of the FBI news which sent shockwaves through financial markets that had been winding down for the weekend.
Chicago’s CBOE Vix index, coined Wall Street’s “fear gauge”, jumped 10% on the heels of the news that comes just 11 days before the US presidential and Congressional elections.
Donald Trump, Clinton’s Republican challenger, has fallen dramatically in the polls in recent weeks, something that market strategists said had eased uncertainty in the markets given the real estate businessman’s controversial views on trade and immigration.
The FBI revelations, although not shedding light on how serious or otherwise the email haul is, are likely to dent Clinton’s support in marginal territories and come as a late tonic to Trump’s hitherto struggling campaign.
Even with opinion polls said to be exaggerating Clinton’s current lead, the prospect of an election upset, or even impeachment proceedings in a new presidency, are enough to rattle a market that had priced in a Clinton win.
A Trump victory could also put back on ice the hitherto growing prospects of a December interest rate hike, as much remains unclear about his fiscal plans.
Taking it all on board, the market bellwether S&P 500 index closed down 0.3% at 2126 and led by Mckesson Corp (NYSE:MCK), down 37.5% at $123.02.
The S&P Midcap 400 closed down 0.1% at 1499 while the the S&P Smallcap 600 finished down 0.1% at 718.
Early trading
US stocks rose after seesawing on Friday in the wake of buoyant economic growth data which was reassessed to read: a December Fed rate hike is in the bag.
The 2.9% estimate of GDP growth in the third quarter far exceeded the 2.5% forecast and led analysts to chalk in a Dec hike, especially if the status quo candidates, Hillary Clinton succeeds in winning next month’s US presidential election.
Expectations for a mid-Dec rate hike are now running at 75%. A month ago they were 60%.
The S&P 500 opened lower, then reversed to stand 0.3% higher at 2138 and led by Hanesbrands Inc (NYSE:HBI) up 9.7% at $26.11 following third quarter earnings.
The S&P Midcap 400 was up 0.4% at 1507 and led by Cirrus Logic Inc (NASDAQ:CRUS) up 9.8% to $56.84 after the leader in high-precision analog and digital signal processing products reported second qyarter revenue of $429mln late on Thursday.
The S&P Smallcap 600 was up 0.5% at 722 and led by Virtus Investment Partners (NASDAQ:VRTS) up 26% to $117.25 after announcing third quarter earnings.
Pre-Open
US stocks are likely to open firmer on Friday after some after-hours selling reversed overnight as investors drew cheer from forecast-beating economic growth data and a bond market sell-off the previous day halted.
The Bureau of Economic Analysis reported advance third quarter GDP of 2.9% from 1.4% in the previous quarter. It was expected at 2.5%.
The S&P 500 future is indicated up 0.1%.
Chevron (NYSE:CVX) returned to profit on Friday, reporting a huge quarterly earnings beat as the company continued to cut costs amid a protracted oil price rout now entering its third year. Chevron shares were 0.3% higher at $100.23 pre-market.
Although not the best news, it came in better than feared: ExxonMobil (NYSE:XOM), the world’s largest oil company by market capitalisation, has reported a 38% drop in third quarter earnings to 63 cents per share, hit by lower prices for crude and natural gas and a squeeze on profit margins in refining. The earnings were slightly above the average of analysts’ forecast, which was 58 cents.
Shares in Exxon fell 1.4% to $85.70 in pre-market trading.
Shares in Tronc Inc (NASDAQ:TRNC) which dropped 27.8% to $12.27 after reports that rival Gannett Co Inc (NYSE:GCI) has lost funding to buy the beleaguered owner of the LA Times, was 3.3% higher at $12.68 pre-market. Tronc is to announce quarterly earnings on Tuesday and the stock was buoyed after news that a hedge fund recently bought a new stake in the company. Rhumbline Advisers bought a new stake during the second quarter, according to its most recent disclosure with the Securities and Exchange Commission.
Meanwhile, shares in Baker Hughes (NYSE:BHI) spiked 7.2% to $58.50 after the Wall Street Journal reported that General Electric (NYSE:GE) was looking to buy the firm.
But enthusiasm faded a bit after General Electric said in a statement it was "in discussion with Baker Hughes on potential partnerships... [but] none of these options include an outright purchase."
Shares in beer giant Anheuser-Busch InBev (NYSE:BUD) slipped about 4% in Europe after the company reported results that came in below expectations. In New York the stock was down 2.9% at $118.00 pre-market.
Shares in Google's parent company Alphabet (NASDAQ:GOOGL) are set to rise at the open after reporting a surge in sales and profit in the latest quarter. So far shares are indicated up 1.2% at $827.50.
But other stocks were less fortunate.
Online retailer Amazon.com (NASDAQ:AMZN) was still nursing a more than 5% loss after disappointing quarterly earnings late Thursday. It was down 5.5% at $773.80 pre-market.