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Baseless claims of widespread election fraud from President Trump, as well as ongoing vote counts in battleground states that may last through the weekend, has Wall Street in a cautious mood heading into Friday trading.

The Friday Market Minute

  • Global stocks mixed as U.S. Presidential race narrows in key states, while Donald Trump’s legal  threats raise the prospect of a contested outcome.
  • U.S. TV networks pull away from Trump briefing that made baseless claims of voter fraud, while Democrat Joe Biden takes a narrow lead in Georgia.
  • Vote counting in battleground states may last through the weekend, while a run-off for the two Senate seats in Georgia won’t take place until January.
  • U.S. COVID infections rise at a record pace in 20 states yesterday, with national infections topping 120,000.
  • Wall Street futures suggest a weaker open on Wall Street ahead of third quarter earnings from CVS and ViacomCBS as well as the October payroll report at 8:30 am Eastern time.

U.S. equity futures retreated into the red Friday, with markets pulling back from the best run on Wall Street in nearly three decades, as Presidential races tightened in key battleground states, setting up the potential for a protracted legal fight that could delay final results for several weeks.

Democratic challenger Joe Biden took a narrow lead in Georgia, which carries 16 Electoral votes, during overnight counting in suburban counties in Atlanta, while President Donald Trump’s lead in Pennsylvania, and its 20 Electoral College votes, narrowed to just 18,000. 

Trump’s baseless claims of widespread electoral fraud last night during a press briefing at the White House — during which several TV networks cut away from in order to fact-check a range of false statements from the President — have raised the prospect of a contested outcome that could involve  the newly-comprised Supreme Court. 

In the meantime, a tight Senate race in Georgia, where Republican David Perdue leads Democrat Jon Ossoff but hasn’t taken a 50% share of the vote, likely means both that contest, as well as one between Republican Kelly Loeffler and Democrat Raphael Warnock, will be re-run in early January, meaning the composite of the upper chamber of Congress may not be know for at least two months. 

Against that increasingly complicated political and legal backdrop — as well as narrow races and disputed vote counting in Nevada and Arizona — U.S. coronavirus infection rates are rising at a record pace in at least 20 states, with national cases surging by more than 120,000 yesterday alone. 

Job growth also appears to be slowing, based on both ADP’s National Employment report earlier this week, which showed a smaller-than-expected 365,000 gain, and yesterday’s weekly jobless claims, which indicate that around 21.5 million Americans are still out of the workforce.

The Commerce Department will publish its October non-farm payroll report at 8:30 am Eastern time, with economists looking for a headline figure of anywhere between 500,000 and 750,000 new jobs created.

With a swirl of risk-off headlines in the market Friday, and Wall Street riding its strongest winning streak since 1982 — with four consecutive days of 1%-plus gains — investors are looking to book from profits and protect their positions heading into what could be a dramatic weekend in this historic Presidential election.

Futures contracts tied to the Dow Jones Industrial Average suggest a 150 point opening bell decline, while those linked to the S&P 500 are priced for a 26 point pullback. Nasdaq Composite futures are indicating a 140 point retreat for the tech-focused index, which has gained nearly 9% so far this week.

European stocks were on a similar path this morning, as well, with markets following U.S. futures and eyeing record rises in coronavirus infections in France, as well as dire warnings on the state of the pandemic in Germany and elsewhere.

The Stoxx 600 benchmark, the region’s broadest measure of share prices, was marked 0.8% lower in the opening hours of trading, while Britain’s FTSE 100 slipped 0.44%.

The U.S. dollar extended its slump in overnight trading, falling 0.1% to an early September low of 92.44 as investors factored in fresh monetary stimulus from the Federal Reserve following comments from Chairman Jerome Powell yesterday and the likely Congressional gridlock expected in January. 

Overnight in Asia, however, stronger-than-expected profit forecasts from carmakers Toyota and Honda helped the Nikkei 225 rise 1.9% to 24,325.23 points, the highest since November 1991, even as the yen rose to an early March low of 103.33 against the weaker greenback.

The region-wide MSCI ex-Japan benchmark, meanwhile, was last seen 0.36% higher heading into the final hours of trading. 

Global oil prices, however, failed to follow suit, with concerns over both the fate of OPEC’s planned production increase, as well as energy demand from COVID-hit economies, continuing to pressure crude prices.

WTI contracts for December delivery, the U.S. benchmark, traded $1.01 lower from their Thursday close in New York and were changing hands at $37.78 per barrel in early European dealing while Brent contracts for January, the new global benchmark, were seen 98 cents lower at $39.98 per barrel.