U.S. equities finished with solid gains, recouping some of yesterday’s slip, amid a host of earnings reports from PayPal, Square, Lyft and Peloton that were cheered and suggested the severe impact of the COVID-19 pandemic may be showing signs of stabilization. Moreover, progress on combating the virus moved forward, courtesy of Moderna receiving FDA approval for later-stage trials of its COVID-19 vaccine candidate. Investors appeared to shrug off more dire employment data, as initial jobless claims came in north of 3,000,000 for last week, and with tomorrow’s key April nonfarm payroll report looming. Treasury yields declined as bond prices moved higher after seeing the yield curve steepen as of late. The U.S. dollar finished lower, gold gained solid ground, and crude oil prices lost steam late in the day. Europe finished higher amid the upbeat sentiment, with the Bank of England noting that it stands ready to act to combat the crisis if more is needed, while markets in Asia were lower.
The Dow Jones Industrial Average rose 211 points (0.9%) to 23,876, the S&P 500 Index gained 33 points (1.2%) to 2,881, and the Nasdaq Composite advanced 125 points (1.4%) to 8,980. In moderately heavy volume, 955 million shares were traded on the NYSE and 3.7 billion shares changed hands on the NASDAQ. WTI crude oil fell $0.44 to $23.55 per barrel and wholesale gasoline gained $0.05 to $0.93 per gallon. Elsewhere, the Bloomberg gold spot price jumped $32.16 to $1,717.87 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—lost 0.2% to 99.90.
Weekly initial jobless claims came in at 3,169,000 for the week ended May 2nd, above the Bloomberg estimate of 3,000,000, but were down compared to the prior week’s upwardly-revised 3,846,000 level. The four-week moving average decreased by 861,500 to 4,173,500, while continuing claims increased by 4,636,000 to 22,647,000, north of estimates of 19,800,000. The four-week moving average of continuing claims for the week ended April 25th rose by 3,800,250 to 17,097,750.
Preliminary Q1 nonfarm productivity dropped by 2.5% on an annualized basis, versus expectations of a 5.5% fall, and following the unrevised 1.2% increase seen in Q4. Unit labor costs jumped 4.8%, versus the forecast calling for a 4.5% gain. Unit labor costs were unrevised at an increase of 0.9% in Q4.
Consumer credit, released in the final hour of trading, showed consumer borrowing slumped by $12.1 billion during March, surprising economists polled by Bloomberg that were calling for an increase of $15.0 billion, while February’s figure was adjusted downward to a rise of $20.0 billion from the originally reported $22.3 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, rose $5.8 billion, a 6.2% increase y/y, while revolving debt, which includes credit cards, tumbled by $36.4 billion, a 30.9% y/y fall.
Treasuries were higher, as the yield on the 2-year note was down 5 basis points (bps) at 0.14%, while the yield on the 10-year note lost 9 bps to 0.62%, and the 30-year bond declined 10 bps to 1.31%.
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