Before The Bell
For much of the past two months, the focus of Wall Street has been on the coronavirus, the pandemic that has killed almost 50,000 Americans and infected more than 850,000. This week, however, that disease has had to share top billing with the oil market. On Monday and Tuesday, energy prices fell tumbled, hitting multi-decade lows in some cases. And stocks fell back in tandem with the Dow Jones Industrial Average losing 592 and 632 points, respectively. Then, on Wednesday, recovering oil prices pushed the Dow up by 456 points.
As to yesterday, a further rebound in the oil patch sent the market higher in the early going, with the blue chips climbing by more than 400 points in the first hour. Meanwhile, other news was not so compelling and stocks would soon retrace those early gains. First, before the market opened, the Labor Department reported that weekly jobless claims had jumped by 4.4 million. That was modestly higher than the 4.3 million increase that had been forecast. In all, such filings now top 26 million over the past five weeks.
Also disheartening was the report of a 15.4% drop in the sale of new homes last month. The total on an annual basis came to 627,000 homes, the weakest reading since July of 2013. Median prices also declined in March. That dour report followed by two days a report showing that existing home sales fell 8.5% last month. It should be noted that these two issuances reflect conditions for March, a month that was more or less operating normally until the last two weeks, at which point the country went on a partial lockdown. April data will be worse.
The brisk advance in the market would not continue lockstep, however. Indeed, as the afternoon began, the Dow lost almost all of its early advance, while the NASDAQ briefly went negative. What sent the bulls scurrying was a report that a key drug by Gilead Sciences (GILD), which has been touted as an effective antiviral medicine was found by a study in China to be ineffective in that regard. However, a study by the University of Chicago is not yet to be put out on that medicine, so there remains hope for the drug.
That possible counter study would then help the market regroup again in mid-afternoon, although the earlier highs would not again be approached as the session wound down. All in all, it was a most volatile performance by a skittish equity market. Then, after this generally strong showing would last until we reached the final hour of trading, stocks began a final selloff, which would carry into the close, leaving the indexes in a mixed final outcome.
All told, the Dow would finish ahead just 39 points, while the S&P 500 Index and the NASDAQ would end nominally in the red. Then, after the close, chip making giant Intel (INTC) posted strong earnings and revenues for the first quarter. However, it expressed caution going forward, going as far as to suspend its full-year guidance. The stock, a solid performer this year fell in after-hours trading. Also falling in after-hours trading were shares of Alphabet (GOOG) the parent of Google, on news of a reduced marketing budget.
Looking ahead now to a new day, we see that the equity futures, off last night, are now higher in early dealings this morning, suggesting a stronger opening when trading resumes shortly.
- Harvey S. Katz, CFA
At the time of this article's writing, the author had positions in INTC.
