Stocks Post Modest Gains in Rocky Session……
The U.S. equity markets were able to post slight gains after a choppy session, with the NASDAQ getting an extra boost from tech and communications services stocks. Investors got another dose of disappointing economic news, while also awaiting President Trump’s presser which is expected to provide guidelines on reopening the economy. Weekly initial jobless claims spiked again, pushing the number of first time applications over the 22 million mark in just the past four weeks, while housing construction dropped and another read on regional manufacturing plunged. Results from the financial sector continued to pour in, with Morgan Stanley missing forecasts to continue the negative theme out of the space, while Bed Bath & Beyond rallied on its results. Elsewhere, Costco Wholesale increased its quarterly dividend and Abbott Labs topped quarterly estimates and announced it recently launched three tests for COVID-19. Treasury yields were mostly lower as bond prices moved higher and the U.S. dollar jumped, while gold and crude oil prices were little changed. Markets in Europe and Asia finished mixed.
The Dow Jones Industrial Average rose 33 points (0.1%) to 23,538, the S&P 500 Index increased 16 points (0.6%) to 2,800, and the Nasdaq Composite advanced 139 points (1.7%) to 8,532. In moderately heavy volume, 1.1 billion shares were traded on the NYSE and 3.9 billion shares changed hands on the NASDAQ. WTI crude oil was unchanged at $19.87 per barrel, while wholesale gasoline lost $0.01 to $0.71 per gallon. Elsewhere, the Bloomberg gold spot price inched $0.50 higher to $1,717.33 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.6% higher at 100.04.
The markets remained volatile with the week continuing to see wide swings north and south of the unchanged mark, as signs that the coronavirus curve may be flattening has fostered early discussion regarding when the world’s largest economy can begin to reopen. The massive amount of global monetary and fiscal policy stimulus—led by the U.S.—that has thrown trillions of dollars aimed at restoring proper financial market functioning and combating the severe spike in unemployment, has also supported sentiment. However, the standard of living for most remains challenged as social distancing continues and market conviction has been tested by economic data as of late illustrating the unprecedented disruption of the COVID-19 pandemic. Moreover, the healthcare system remains stressed, with testing efforts behind the curve to keep optimism of the timing of reopening of the economy in check.
Weekly initial jobless claims spiked again, coming in at 5,245,000 for the week ended April 11th, below the Bloomberg estimate of 5,500,000, and compared to the prior week’s upwardly-revised 6,615,000 level. The four-week moving average jumped by 1,240,750 to 5,508,500, while continuing claims surged by 4,530,000 to 11,976,000, south of estimates of 13,260,000. Unemployment claims over the past four weeks have surged to breach the 22 million mark amid the unfolding COVID-19 crisis, but the $2.2 trillion fiscal aid package—and expectations of more—and unprecedented blast of trillions of dollars in monetary policy support are aimed at stemming the flood of unemployment.
The Philly Fed Manufacturing Index in April plunged more than expected to -56.6 from the -12.7 posted the month prior, versus expectations of a decline to -32.0. The index moved further into contraction territory, denoted by a reading south of zero, and hit the lowest level since the mid-1980s. The contraction in new orders accelerated sharply, while shipments, employment and prices paid all fell solidly below zero. However, the six-month outlook component of the survey improved.
Housing starts for March tumbled 22.3% month-over-month (m/m) to an annual pace of 1,216,000 units, below forecasts of 1,300,000 units. February starts were revised lower to an annual pace of 1,564,000. The March drop in housing starts was the largest since 1984. Moreover, building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, fell 6.8% m/m to an annual rate of 1,353,000, north of expectations of 1,296,000 units, and compared to February’s unrevised 1,464,000 rate.
Treasuries were higher on the flood of data, as the yield on the 2-year note was flat at 0.21%, while the yield on the 10-year note declined 3 bps to 0.61%, and the 30-year bond rate decreased 7 bps to 1.21%.
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