Stock futures were little changed Thursday morning as investors awaited the Labor Department’s latest print on new weekly unemployment claims, which is expected to show another 3.5 million people filed for jobless insurance last week.
The muted market moves came on the heels of a sharp rally during Wednesday’s session, when investor optimism over a potential coronavirus treatment and a batch of strong earnings results helped buoy risk assets.
Market participants took most of the major corporate earnings results posted late Wednesday and Thursday morning in stride, even as the impacts of the coronavirus permeated commentary in the reports. Facebook, Tesla, Twitter and Microsoft each reported quarterly sales growth over last year, as the company’s products and services showed strong demand at the start of the pandemic’s domestic escalation. Shares of each of these companies rose in late trading.
Earlier, positive results from a clinical trial of Gilead’s coronavirus antiviral treatment candidate helped fuel a sharp rally in stocks on Wednesday, with each of the three major indices up at least 2.2%. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, said the results were “quite good news,” stoking investor optimism.
Hopes for the near-term approval of a treatment and prospects that this could expedite a return to some semblance of normalcy for businesses closed during the coronavirus outbreak eclipsed the latest batch of dismal economic data on Wednesday. U.S. gross domestic product contracted by the most since the fourth quarter of 2008 in the first three months of the year, and consumer spending – the biggest portion of domestic economic activity – shrank by the most in 40 years.
The coming months are likely to be even worse. But as expectations grow more somber, policymakers reaffirmed their commitment to support the domestic economy with a wide range of stimulus measures. On the heels of a pair of emergency rate cuts and unscheduled new programs released over the past month, the Federal Reserve said on Wednesday it would keep interest rates near zero for the foreseeable future, “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
“Stocks are rallying like crazy and we do mean crazy in part because of the decisive actions the Fed took earlier last month,” Chris Rupkey, chief financial economist at MUFG Union Bank, said in an email Wednesday.
“The announcement of unlimited QE [quantitative easing] the same day the stock market bottomed in March was music to investors’ ears. Stocks have rallied ever since that day that the Fed went all-out,” he added. “Stocks keep rallying as the coronavirus pandemic curve of positive cases continues to improve and the states are starting to open back up again which means the GDP recession is just temporary.”
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7:20 a.m. ET: Twitter reports highest year-on-year user growth to date as pandemic drives consumers to platform, but highlights late-quarter ad revenue slump
Twitter (TWTR) posted better than expected first-quarter sales and user growth over last year, with average monetizable daily active users hitting 166 million during the period.
“Average monetizable DAU (mDAU) grew 24% year over year, driven by typical seasonal strength, ongoing product improvements, and global conversation related to the COVID-19 pandemic,” the company said in a statement. “This is our highest reported year-over-year growth rate to date. We have added 14 million average mDAUs since the previous quarter.”
Revenue of $808 million grew about 3% over last year, “reflecting a strong start to the quarter that was impacted by widespread economic disruption related to COVID-19 in March.”
Total advertising revenue of $682 million grew by $3 million over last year, but weakened sharply at the end of the quarter, presaging a tougher second quarter as the coronavirus pandemic escalated. From March 11 until March 31, Twitter’s total advertising revenue dropped 27% over last year. Twitter added that the latter part of Q1 was “challenging for the conversation around live sports and their highlights on Twitter as professional sports leagues suspended operations in light of the COVID-19 pandemic,” but added that “many content partners quickly adapted.”
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7:05 a.m. ET: McDonald’s reports 22% drop in global same-store sales in March as pandemic undercut restaurant revenue
McDonald’s, a Dow component, reported a drop in first-quarter sales and profitability over last year as the COVID-19 pandemic pushed consumers to stay in their homes and away from restaurants.
First-quarter revenue of $4.71 billion fell 6% over last year, and adjusted earnings per share of $1.47 were down 25 cents. Global same-store sales fell 3.4% in the first quarter, after a 22% drop in March outweighed an about 7% climb in January and February.
In the U.S., same-store sales inched up by 0.1% in the first quarter. U.S. same-store sales in March declined by 13.4%, dragging after an 8% rise in January and February.
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7:02 a.m. ET Thursday: Stock futures little changed
Here were the main moves in markets, as of 7:03 a.m. ET:
S&P 500 futures (ES=F): down 11.75 points, or 0.4%, to 2,929.25
Dow futures (YM=F): down 53 points, or 0.22%, to 24,513.00
Nasdaq futures (NQ=F): up 6.5 points, or 0.07%, to 9,043.00
Crude (CL=F): +$2.41 (+16.00%) to $17.47 a barrel
Gold (GC=F): +$15.30 (+0.89%) to $1,728/70 per ounce
10-year Treasury (^TNX): -1.9 bps to yield 0.608%
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6:06 p.m. ET Wednesday: Stock futures open higher
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:06 p.m. ET:
S&P 500 futures (ES=F): up 11.5 points, or 0.39%, to 2,952.50
Dow futures (YM=F): down 86 points, or 0.35%, to 24,652.00
Nasdaq futures (NQ=F): up 53.5 points, or 0.59%, to 9,090.00
NEW YORK, NY – JANUARY 10: An empty trading floor is seen after the closing of the New York Stock Exchange (NYSE) on January 10, 2020 in New York City. Amid new sanctions on Iran and 145k more U.S. jobs added and wage growth in December, the Dow topped the 29,000 milestone before pulling back to 28,823.77. (Photo by Kena Betancur/Getty Images)
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