U.S. stocks opened lower Thursday on the busiest day of the corporate earnings reporting season as investors pored over a parade of quarterly results and a grim weekly jobless claims report.
Europe reported economic growth contracted by 3.8% while the European Central Bank left its policy interest rates unchanged but announced new financing operations Thursday, one day after the Federal Reserve on Wednesday vowed to use all of its policy tools to soften the economic hit from the COVID-19 pandemic.
How are benchmarks faring?
The Dow Jones Industrial Average
DJIA,
opened 273 points, 1.1%, lower, near 24,360, while the S&P 500
SPX,
Index lost 19 points or 0.7% to open near 2,920. The Nasdaq Composite
COMP,
was about 4 points lower at the start of trading, less than 0.1%, starting the day near 8,911 .
On Wednesday, the Dow gained 532.31 points, or 2.2%, to settle at 24,633.86, while the S&P 500 added 76.12 points, or 2.7%, to close at 2,939.51. The Nasdaq Composite advanced 306.98 points, or 3.6%, ending at 8,914.71.
The Russel 2000 Index
RUT,
which tracks smaller-capitalization companies, rose 4.8%, or 66.38 points, to finish at 1,360.46.
What’s driving the market?
The pain facing many Americans was on stark relief Thursday morning. Nearly 3.8 million people filed for unemployment benefits for the first time in the most recent week, the Labor Department said. That topped the consensus forecast among economists surveyed by MarketWatch, even as last week’s report was revised up. The new tally shows that over 30 million Americans have lost their job since the start of the coronavirus pandemic.
Personal income also fell sharply in March as workers received less compensation, the government said Thursday. Personal incomes dropped 2% in March, while disposable income also fell 2%. Consumer spending slumped 7.5% last month as households stayed at home.
Eurostat reported eurozone first-quarter GDP fell 3.8% compared with the fourth quarter. European data is reported on a quarter-on-quarter basis, so on an annualized basis, the economy fell 14.4%, worse than the U.S. gross domestic product decline of 4.8%
The ECB provided a monetary-policy update, leaving interest rates unchanged, while further easing conditions for its existing targeted long-term refinancing operations, or TLTROs, and introducing a new program of non-targeted pandemic emergency longer-term refinancing operations, or PELTROs. In a press conference after the ECB’s decision, the central bank’s chief said the Eurozone economy could contract as much as 12%.
On Wednesday, Fed chairman Jerome Powell emphasized the limits of central banks to tackle the pandemic and pointed to lawmakers to do more to control infections and provide sufficient funding to restart the economy.
Check out: Federal Reserve chair Powell will put pedal to the metal to help economy: live blog recap
But central bank interventions are providing a tailwind for stocks, even if market outperformance feels disconnected from real economic fundamentals.
“Markets are looking through this horrendous air pocket of economic fundamentals and leaning on the Fed,” said Chris Dillon, capital markets investment specialist for T. Rowe Price. “We’re all MMTers now,” he added, referring to Modern Monetary Theory, the idea that government budget deficits don’t matter.
And investors have taken heart from strong corporate reports from Facebook, Microsoft and Tesla late Wednesday, perhaps reflecting more optimism about the ability of technology stocks to be “on the right side of COVID-19,” Dillon said.
The concentration of stock-market gains among tech heavyweights has been somewhat concerning, Dillon said. “Narrow market leadership can only carry you so far.” But signs of life among small-cap stocks was heartening, he said. Small-cap stock performance is often seen as a measure of investor confidence in the economy.
Read:The ‘Great Repression’ is here and it will make past downturns look tame, economist says
Which stocks are in focus?
- McDonald’s
MCD,
-2.19%
missed on profit but beat revenue estimates for the first quarter, even after many of its restaurants were forced to close during the coronavirus pandemic. Shares slipped more than 2% at the start of trading. - Twitter Inc.
TWTR,
-2.50%
topped expectations with its first-quarter results, reported a net loss of $8 million, or 1 cent a share, versus net income of $191 million, or 25 cents a share, in the year-earlier period. - Shares of cigarette-maker Altria Group
MO,
-0.49%
were in focus after it beat profit and revenue expectations, as COVID-19-related pantry loading helped boost shipment volumes. - Coach parent Tapestry Inc.
TPR,
-7.33%
reported Thursday that it swung to a wider-than-expected loss, as 90% of the company’s stores were closed or operating on shortened hours as a result of the COVID-19 pandemic. - Shares of Chesapeake Energy Corp.
CHK,
-45.99%
tumbled Thursday, after Reuters reported late Wednesday that the oil and gas production company was preparing for a potential bankruptcy. - Molson Coors Beverage Co.
TAP,
-9.24%
stock slip before the bell as the beer brewer says coronavirus-related closures will hurt fiscal year results. - Amazon.com
AMZN,
+2.50%
is expected to report $6.35 per share at the end of 2019, based on average analysts’ estimate. For the full year, analysts expect earnings of $28.15 a share. Shares were higher in early action. - Apple Inc.
AAPL,
+1.78%
is set to report earnings after the close on Thursday. - Salesforce.com Inc.
CRM,
+1.69%
late Wednesday announced it is canceling its Dreamforce conference, as well as its other major in-person events through the end of the year due to the coronavirus pandemic. - Qualcomm Inc.
QCOM,
-0.93%
topped Wall Street estimates after the closing bell Wednesday, and forecast a COVID-19-impaired outlook still was in the ballpark of analysts’ consensus, and said it still expects 5G sales to fall within its projections. Shares were nearly 2% higher after the opening bell. - EBay Inc. shares (TICKER:EBAY) beat Wall Street earnings expectations.
- Facebook
FB,
+6.83%
missed earnings and user growth estimates, reporting first-quarter earnings of $4.9 billion, or $1.71 a share, compared with $2.43 billion, or 85 cents a share, in the year-ago period. Revenue grew 17% to $17.74 billion from $15.08 billion in the year-ago period. - Tesla Inc.
TSLA,
+6.58%
late Wednesday surprised Wall Street by posting a first-quarter profit amid the broad economic destruction wrought by the coronavirus pandemic. - Microsoft Corp.
MSFT,
+0.69%
outperformed the financial expectations that it faced even before the coronavirus pandemic in an earnings report Wednesday, reporting fiscal third-quarter earnings of $10.75 billion, or $1.40 a share, on sales of $35 billion Wednesday, up from profit of $1.14 a share on revenue of $30.57 billion a year ago. Analysts on average expected earnings of $1.27 a share on sales of $33.76 billion, according to FactSet.
See more:Apple’s annual cash bonanza arrives as other companies cut investor returns due to coronavirus
How are other markets trading?
West Texas Intermediate crude for June delivery
CL.1,
jumped $1.75, or 12%, higher at $16.80 a barrel.
Gold for June delivery
GCM20,
ticked down $1.70, or 0.1%, higher at $1,711.70 an once.
European traded lower, with the Stoxx Europe 600
SXXP,
down 1.3%, and the FTSE 100
UKX,
retreating 2.2%.
The U.S. dollar
DXY,
was up 0.1% against a basket of currency trading partners, as measured by the U.S. Dollar Index.
Overnight in Asia, Japan’s Nikkei
NIK,
rose 2.1%, China’s Shanghai Composite Index
SHCOMP,
rose 1.3 %, while the CSI 300 Index
000300,
gained 1.2%.
How is MarketWatch’s oil-currency index performing?
The MarketWatch Petrocurrency Index
MWPC,
jumped 0.5% to 233.91.
See:Shareholder returns will fall 40% this year, Goldman says. Here are some safe dividend plays
Source : MTV
