Stocks cut earlier losses from the overnight session and opened higher Thursday after the Federal Reserve unexpectedly unleashed a new multi-trillion-dollar stimulus plan to support businesses during the coronavirus pandemic.
Investors also eyed the Department of Labor’s initial jobless claims report, which showed a greater than expected 6.606 million new individuals filed for unemployment insurance last week.
Market participants have weighed recent coronavirus outbreak developments with a more positive tilt as of late. Growth in new cases has slowed or even turned negative in global epicenters, with New York state reporting a recent decline in hospitalization numbers even as new deaths – a lagging indicator – increased by the largest single-day amount on Wednesday at 779.
“It’s not a time to get complacent, it’s not a time to do anything different than what we’ve been doing,” Governor Andrew Cuomo said in his daily press briefing Wednesday afternoon. “We have to remain diligent, we have to remain disciplined going forward, but there’s no doubt now that we are now bending the curve.”
In a similar vein, New York City Major Bill de Blasio said Thursday that social distancing restrictions may even need to be tightened further to rein in any potential for a resurgence in cases.
Policymakers’ readiness to inject further stimulus to support the virus-stricken economy has also helped buoy risk assets, with the Federal Reserve unveiling a plan to inject some $2.3 trillion in additional funds for households and local governments.
In Congress, Senate Majority Leader Mitch McConnell has been pushing to deliver an additional $250 billion worth of small business aid to the funds previously allocated in Congress’s $2.2 trillion pandemic relief package, which would bring the total amount available to $600 billion.
While McConnell has sought to vote on the additional funds for the Paycheck Protection Program as soon as Thursday, House Democrats including Senate Minority Leader Chuck Schumer and House Speaker Nancy Pelosi have also they want to add other measures including $100 billion for health systems and $150 billion for state and local governments, with these discrepancies from McConnell’s plan potentially delaying a further funding infusion.
Elsewhere, investors on Thursday will be watching for more companies to pre-announce quarterly earnings results to provide more visibility into the impact of the coronavirus outbreak on their businesses. In one recent example, Starbucks said in a filing after market close Wednesday that its comparable same-store sales growth in the U.S. was the best in four years until March 11, after which the spread of COVID-19 began to dent results and turn quarterly U.S. comp sales negative. The company withdrew its full-year guidance for 2020.
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11:13 a.m. ET: Stocks hold higher after Fed stimulus
Utilities and Real Estate led advances in the S&P 500. In the Dow, advances were led by JPMorgan Chase, up 7.5%, and materials company Dow Inc.
Here were the main moves in markets, as of 11:13 a.m. ET:
S&P 500 (^GSPC): +35.74 (+1.3%) to 2,785.72
Dow (^DJI): +305.7 (+1.3%) to 23,739.27
Nasdaq (^IXIC): +19.09 (+0.24%) to 8,108.17
Crude (CL=F): +$2.26 (+9.01%) to $27.35 a barrel
Gold (GC=F): +$39.20 (+2.33%) to $1,723.50 per ounce
10-year Treasury (^TNX): -0.1 bps to yield 0.744%
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10:38 a.m. ET: Oil prices jump after reports Saudi Arabia, Russia pacing toward agreement for output cuts
U.S. and Brent crude oil prices rose Thursday morning after Reuters reported Saudi Arabia and Russia were in the process of reaching an agreement to deepen oil production cuts, and that these reductions could be as high as 20 million barrels per day.
West Texas intermediate rose 8.8% to $27.29 per barrel as of 10:29 a.m. ET, while Brent crude rose 6.7% to $35.03 per barrel.
OPEC and allied nations conducted a virtual meeting Thursday to discuss the direction of oil production after a slump in energy prices this year.
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10:15 a.m. ET: BMO: We don’t care about the recovery’s shape, and you shouldn’t either
On Thursday, BMO Capital Markets’ Brian Belski explained why the debate over a rapid (ie ‘V-shaped’) or elongated (‘U-shaped) recovery from the coronavirus crisis is less important than the real-time data. “People are way too entralled with [the recovery’s shape]…instead look at what’s happening on the company level. Stop trying to figure out if its an ‘L’ or a ‘V’, and let companies get back to business.”
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10:00 a.m. ET: Consumer sentiment falls the most on record in April amid outbreak, according to U. Michigan survey
The University of Michigan’s closely watched consumer sentiment index dropped by the most on record in April as the coronavirus pandemic and related business closures weighed on participants.
The headline index fell 18.1 points to 71.0 in April, according to the survey. Beneath the headline index, the subindex tracking consumers’ assessments of current conditions sank by 31.3 points, or almost twice the previous record from October 2008.
The subindex tracking consumer expectations, however, fell by 9.7 points, or less than the prior record from December 1980, which the institution attributed to consumers’ hopes that infection and death rates from COVID-19 will soon peak and allow businesses to reopen.
But these expectations could be misplaced, and lead to a deeper plunge in sentiment down the line, said Richard Curtin, Surveys of Consumers chief economist.
“Consumers need to be prepared for a longer and deeper recession rather than the now discredited message that pent-up demand will spark a quick, robust, and sustained economic recovery,” he said. “Sharp additional declines may occur when consumers adjust their views to a slower expected pace of the economic recovery.”
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9:32 a.m. ET: Stocks open higher after Fed’s new stimulus announcement
Here were the main moves in markets, as of 9:33 a.m. ET:
S&P 500 (^GSPC): +37.22 (+1.35%) to 2,787.2
Dow (^DJI): +352.18 (+1.5%) to 23,785.75
Nasdaq (^IXIC): +64.18 (+0.8%) to 8,155.69
Crude (CL=F): +$1.18 (+4.7%) to $26.27 a barrel
Gold (GC=F): +$47.30 (+2.81%) to $1,731.60 per ounce
10-year Treasury (^TNX): -0.4 bps to yield 0.76%
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9:12 a.m. ET: General Electric expects first-quarter results to be ‘materially below’ prior guidance due to coronavirus
General Electric said Thursday it expects its first-quarter adjusted earnings per share to come in “materially below prior guidance of about $0.10” and that closely watched industrial free cash flow will be near the prior guidance of negative $2 billion.
The company also withdrew its full-year guidance, noting that “given the evolving nature of the COVID-19 pandemic, at this time, GE cannot forecast with reasonable accuracy the full duration, magnitude, and pace of recovery across our end markets, operations, and supply chains,” it said in a statement.
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9:08 a.m. ET: With junk bond move, ‘The Fed is all now in’
The Fed’s latest emergency measures to backstop the economy includes a plan to buy junk bonds — a big and controversial move that market analysts have debated for weeks. Bearing in mind that high-yield issuers were seen as the most vulnerable corporate entities to a coronavirus wash out, veteran analyst Peter Boockvar says the move is huge, indeed:
Outside of buying stocks, the Fed is now all in. It’s no surprise that gold is up $42 in response.
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8:31 a.m. ET: Federal Reserve unveils $2.3 trillion plan to further boost the economy
The Federal Reserve on Thursday unleashed a new series of measures that would inject some $2.3 trillion in additional aid into the virus-stricken economy, focused especially on helping Main Street businesses. These new steps will include programs for helping small- and mid-sized businesses as well as local governments, and will augment aid provided by the Small Business Administration’s Paycheck Protection Program, the Fed said Thursday.
“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” Fed Chair Jerome Powell said in a statement. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”
Stock futures pared earlier losses after the announcement.
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8:30 a.m. ET: Initial jobless claims total 6.606 million for the week ended April 4
New unemployment claims totaled 6.606 million for the week ended April 4, the Department of Labor said in its report Thursday morning.
The figure was above consensus expectations, according to Bloomberg compiled data, with the median economist anticipating 5.5 million new jobless claims for the week.
The prior week’s new jobless claims were upwardly revised to 6.867 million, topping what had already been a record 6.648 million claims previously reported for the week ended March 28.
Continuing unemployment claims, which are reported on a one-week lag, totaled 7.455 million for the week ended March 28. Consensus economists had expected these to be higher at 8.236 million.
For the prior week, continuing unemployment claims were upwardly revised to 3.059 million from the 3.029 million previously reported.
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7:07 a.m. ET Thursday: Stock futures hold lower ahead of weekly jobless claims
Stock futures fell Thursday morning as investors awaited the Labor Department’s weekly initial unemployment claims report, which is expected to show more than 5 million individuals filed for unemployment insurance for the first time last week. Crude oil prices rose and Treasury yields were lower across the curve.
Here were the main moves in markets, as of 7:07 a.m. ET:
S&P 500 futures (ES=F): down 12.25 points, or 0.45% to 2,722.75
Dow futures (YM=F): down 40 points, or 0.17% to 23,206.00
Nasdaq futures (NQ=F): down 33 points, or 0.4% to 8,156.75
Crude (CL=F): +$1.76 (+7.01%) to $26.85 a barrel
Gold (GC=F): +$21.30 (+1.26%) to $1,705.60 per ounce
10-year Treasury (^TNX): -2.9 bps to yield 0.735%
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6:03 p.m. ET Wednesday: Stock futures edge lower
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:03 p.m. ET on Wednesday
S&P 500 futures (ES=F): down 5 points, or 0.18% to 2,730.00
Dow futures (YM=F): down 6 points, or 0.03% to 23,240.00
Nasdaq futures (NQ=F): down 24.75 points, or 0.3% to 8,165.00
Wall Street and New York Stock Exchange in Downtown Manhattan, New York City, USA
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