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Wall Street Breakfast: What Moved Markets This Week

May 02, 2020 8:48 AM ET12 Comments
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Stocks started the new month with sharp losses, sending the Dow, S&P and Nasdaq narrowly into the red for the week, following sobering comments from tech giants Amazon and Apple about the impact of the coronavirus pandemic. Amazon announced plans to spend all profits from the current quarter on its coronavirus response, while Apple reported flat first quarter revenue growth and did not offer guidance due to uncertainties related to the virus' impact. President Trump added to the market's woes by threatening to impose tariffs on China over its handling of the pandemic. Finally, the Institute for Supply Management's manufacturing index fell to its lowest level since April 2009.

On the economy

The Fed pledged to leave interest rates near zero until full employment and inflation come back and said it would use "its full range of tools to support the U.S. economy in this challenging time." The news was enough to override figures showing GDP contracting by 4.8% in Q1, the worst quarterly performance since 2009. Later in the week, the downbeat note was accentuated by another 3.8M in new jobless claims and the steepest decline in monthly U.S. consumer spending tracing back to 1959.

New age for Big Oil

"Given the continued deterioration in the macroeconomic outlook and significant mid- and long-term uncertainty," Royal Dutch Shell (RDS.A, RDS.B) slashed its quarterly dividend to $0.16, from $0.47 per share, for the first time since WWII. COVID-19 slammed demand for oil, gas and related products, while crude recorded a historic plunge into negative territory earlier this month. Shell's adjusted current cost of supplies income, used as a proxy for net profit, slid 45% to $2.9B during the quarter, compared with $5.3B a year earlier.
Go deeper: USO struggles with investment objective.

FAAAM earnings

Seeing "signs of stability" after an initial steep decrease in March ad revenue, Facebook (FB) shares soared 10% AH on Wednesday, while Microsoft (MSFT) climbed 2% as remote work boosted Teams and cloud services. Alphabet (GOOG, GOOGL) also rose 4%, posting strong Q1 figures even as it noted a March advertising slowdown. There was a more of a muted view at Apple (AAPL), which failed to give guidance for the June quarter, as well as Amazon (AMZN), which said it would spend all its Q2 profits on responding to the COVID-19 pandemic.

Retaliation threats

Conversations are at a very preliminary stage, but the U.S. appears to be crafting retaliatory measures against China over the coronavirus outbreak. "We signed a trade deal where they're supposed to buy, and they've been buying a lot, actually. But that now becomes secondary to what took place with the virus," President Trump told reporters. The U.S. is not considering stopping debt payment obligations to Beijing - as that would hurt the "sanctity of the dollar" - but Trump said he could do the same thing, for even more money, via tariffs. While a resumption of the trade war wouldn't be a good recipe for markets, other ideas are under consideration: Sanctions, non-tariff trade restrictions and lifting China's sovereign immunity (allowing lawsuits against Beijing in U.S. courts).
Go deeper: EU chief wants probe into coronavirus origin.

$25B in fresh debt

Helping the company avoid government aid, Boeing (BA) raised $25B in a bond offering on Thursday, a blowout result for the planemaker. The seven-part offering, which includes bonds that won’t be redeemed until 2060, was oversubscribed and attracted better pricing than might have been expected for a firm that just has its credit rating downgraded to a notch above junk status. The deal, expected to close May 4, would be one of the largest-ever corporate bond offerings.
Go deeper: Another blow to Boeing's space wing.

Vaccine leader inked deal for 1B doses

Moderna's (MRNA) experimental vaccine, mRNA-1273, is currently being tested in early-stage trial by the U.S. National Institutes of Health, with mid-stage trials set for Q2. The 10-year collaboration agreement will see the companies produce up to a billion vaccine doses per year at Lonza U.S. (OTCPK:LZAGY), and would cover additional products in the future. Gilead's (GILD) remdesivir trial also drove optimism during the week due to its positive results, though several downgrades to the stock rolled in on Friday.
Go deeper: Coronavirus vaccine could be ready in 2020.

'Food supply chain is breaking'

In a direct appeal to consumers, Tyson Foods (TSN) took out a full-page ad in The New York Times to say that the food supply chain is breaking. "As pork, beef and chicken plants are being forced to close, even for short periods of time, millions of pounds of meat will disappear from the supply chain," wrote Chairman John Tyson. "As a result, there will be limited supply of our products available in grocery stores until we are able to reopen our facilities that are currently closed."
Go deeper: Buzz builds over Beyond Meat.


SoftBank (OTCPK:SFTBY) widened its record annual loss forecast to ¥900B ($8.4B), from ¥750B ($7B), as it calculated the bottom line hit from souring investments before it releases earnings on May 18. Triggering the updated outlook are expectations of a ¥700B loss ($6.6B) on its investment in WeWork (WE) which the tech conglomerate holds outside of its $100B Vision Fund (it has poured more than $13.5B in the office-sharing firm so far). Beyond the losses, SoftBank is also being sued by WeWork for its decision to back out of a $3B tender offer that was agreed upon in October 2019.

Retail trouble

J. Crew prepared for a bankruptcy filing that could come as soon as this weekend, according to multiple sources. While the clothing apparel company is not publicly traded (it was taken private in 2010 via leveraged buyout), it highlights broader trends in the U.S. retail industry, which was already struggling before the coronavirus pandemic. Reports suggest Neiman Marcus is in the process of a bankruptcy filing, while J.C. Penney (JCP) has been in talks with lenders for bankruptcy financing that could total $1B.

Weekly Market Movement Wrap

U.S. Indices
Dow -0.2% to 23,724. S&P 500 -0.2% to 2,831. Nasdaq -0.3% to 8,605. Russell 2000 +2.% to 1,257. CBOE Volatility Index +3.5% to 37.19.

S&P 500 Sectors
Consumer Staples -0.8%. Utilities -1.9%. Financials +4.8%. Telecom +3.7%. Healthcare -0.6%. Industrials +4.3%. Information Technology +3.2%. Materials +4.2%. Energy +9.5%. Consumer Discretionary +3.7%.

World Indices
London +0.2% to 5,763. France +4.1% to 4,572. Germany +5.1% to 10,862. Japan +1.9% to 19,619. China +1.8% to 2,860. Hong Kong +3.4% to 24,644. India +7.6% to 33,718.

Commodities and Bonds
Crude Oil WTI +16.3% to $19.71/bbl. Gold -1.6% to $1,708.2/oz. Natural Gas +7.7% to 1.885. Ten-Year Treasury Yield -0.1% to 139.01.

Forex and Cryptos
EUR/USD +1.43%. USD/JPY -0.56%. GBP/USD +1.03%. Bitcoin +16.2%. Litecoin +4.9%. Ethereum +11.5%. Ripple +11.3%.

Top Stock Gainers
Creative Realities (CREX) +266%. Capricor Therapeutics (CAPR) +192%. Mohawk Group Holdings (MWK) +100%. Midatech Pharma (MTP) +93%. Neonode (NEON) +86%.

Top Stock Losers
Chesapeake Energy (CHK) -63%. Blue Apron Holdings (APRN) -39%. Verona Pharma (VRNA) -36%. Pluristem Therapeutics (PSTI) -32%. Mesoblast (MESO) -31%.

Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.

This article was written by

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Comments (12)

What moved markets this week? The Fed did... again.
Amazon (NASDAQ:AMZN), which said it would spend all its Q2 profits on responding to the COVID-19 pandemic.

Hmm? If a business employs a lot of people and interacts with a lot of people physically Jeff Bezos just told everyone what the future looks like. Zero profits! How many businesses will be able to survive with no profits for 3 more months... longer if there is a fall resurgence of CV19? How many business will survive the legal actions against them if they do not or are unable to mitigate for CV19 threats or similar going forward? How many businesses if they can not afford to mitigate will lose their liability and worker comp insurance? Higher costs and more robots anyone? while unemployed stay home collecting $600/week or more. Won't be long before average SS check will have to be upped to match unemployment pay. Lots of strange things to come ACV19.
TBLS profile picture
If China had any courage they would go long gold futures with 50% of the USD treasury and call in for delivery. Then start selling off all those treasuries to buy the physical gold. Most likely there would not be enough gold available to deliver which would expose the whole US Gold Ponzi scheme. If they play their cards right they would be will positioned to pick up the pieces around the globe for dirt cheap.
Also Elon moved TSLA
Thanks for the summary. There is a tag team battle royal going on, with QE infinity, Stimulus infinity, and Remdesivir [Gilead says it should be able to produce 140K treatments by the end of May] versus more than 30 MILLION unemployed, Q1 GDP -4.8% and Trump Tariff Threat. The outcome won't be decided till shutdown ends. No surprise RDS cut the dividend, even deep pocket big oil can't make money with oil below $30 or worse if they have to pay to store the stuff and pay to shut down and restart wells. The smart guys will cut the dividend to survive until they are making money again, or may have to eventually borrow from the government/the market and pay interest and/or give up/issue dilutive equity. I will wait for economic data to go from really bad to less bad [Michael Santolli] to rebuild positions, I think really bad numbers in Q1 will go to WORSE in Q2 since shutdown hasn't even ended yet!
South Korea has announced some bold changes, in the planning stage, motivated by the unleashing of SARS-CoV-2 globally over just two months. Aiming to protect ordinary citizens, critical industries & supply chains. Researching & developing the newest, next generation technologies, with automation, with integrated 5G communications applied by national businesses.

SA: who wants SA articles on South Korea's pivot, post COVID19? Next, which other governments will respond to clear & present dangers?

Remember, South Korea has suffered many Mainland Chinese epidemics so far.
That's NOT true. The scientists find out that the epidemic Covid-19 in China mostly are type ##C , and the Covid-19 in America are mostly from Europe which is type #A, #B and #E. Can't blame China on that !!
It's baseless shameless.

SA definitely would greatly benefit from articles on SK's successful countering of Covid-19 and its major changes to address both the present situation and any future outbreaks.
Unless I'm missing something, it still arrived in Europe from China. If during the process of moving from Europe to US it mutated, it still tracks back to China.
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