Before The Bell
Stocks began yesterday’s trading session on the upside, with solid gains reported across Asia and most of Europe. The favorable momentum carried over to our shores, and the major indexes ended the day with strong advances.
A number of factors helped lift the market. For one thing, a report on China’s industrial output wasn’t as bad as expected. Furthermore, signs that COVID-19 cases in the U.S. are beginning to selectively level off, and word that 10 states have begun to hash out plans to reopen their economies, also helped to buoy investor spirits. Meanwhile, earnings season has begun in earnest. JPMorgan (JPM) and Wells Fargo (WFC) both announced weak results yesterday, and although Wall Street’s expectations had been lowered, both stocks were down for the day. On the opposite side of the ledger, Johnson & Johnson stock (JNJ) was up more than 4% on better-than-expected results and an increase in its quarterly dividend. Elsewhere, sizable gains were also posted by fellow Dow components Home Depot (HD) and Apple (AAPL).
At the close, the Dow Jones Industrials ended the session up 558 points, or 2.4%, the broader S&P 500 gained 84 points (3.1%), while the tech-heavy NASDAQ fared the best of the lot, advancing 323 points, or just under 4%. Nearly all of the major market sectors were firmly in positive territory for the day, with the largest gains coming from technology (up 3.9%), consumer cyclicals (+3.9%), and consumer noncyclicals (+3.2%). Energy was the only group that lost ground, shedding just under a quarter percent. Altogether, advancing issues outpaced decliners by a better than three-to-one margin.
Elsewhere oil prices took a big hit, with light sweet crude falling 7.5%, to about $20.75 a barrel. The commodity is down more than 37% over the past month, and more than 65% since a year ago, reflecting lower demand in the wake of the COVID-19 pandemic and the current glut in supply.
As we look to the new day, stocks in Asian markets closed down modestly, but the European bourses are showing declines of greater than 2% across the board. Meanwhile, U.S. stock futures are pointing to a sharp decline for the indexes, following the Commerce Department’s report that retail sales in the U.S. were down a record 8.7% last month.
While first-quarter earnings season barrels ahead, reports from Corporate America are not likely to move the needle much in the days ahead. Rather, the market’s attention is likely to remain fixed on developments from the coronavirus front. The hope is that we may soon begin to get some indication as to when business can get moving again. As it stands now, it is almost a given that the June interim will show further deterioration in financial results, and the earliest prospects for the beginnings of a turnaround now rest on the third quarter.
– Mario Ferro
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
