The Nasdaq Composite turned positive for the year during Thursday’s session as optimism about the reopening of the U.S. economy sparked a broad market rally. Energy and financials, as well as industrials stocks like Boeing and the airlines, led the Dow and S&P 500 higher as investors snapped up equities on hopes America could be back to work before long.
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2:15 pm: U.S. 2-year Treasury at record low coincides with futures implying negative fed funds rate in 2021
The yield on the U.S. 2-year Treasury is at a record low of 0.133% at the same time the futures market is expecting the fed funds rate to go negative in 2021. “The primary thing is some investors are pushing the trade of the fed having to cut into negative rates,” said Jon Hill of BMO. Hill said the June 2021 fed funds futures contract is implying negative 0.03%. Starting with the November contract, they begin to price a slightly negative yield. “It’s a pretty substantial market implied probability of a negative rate,” Hill said. “There’s no developments that would drive that specifically today.” The cross asset price action is convoluted, he said, noting stocks are higher and oil is flat. “It’s not a big risk off move that’s driving this. It’s something more idiosyncratic,” Hill added. — Domm, Fitzgerald
2:08 pm: Paul Tudor Jones reportedly bought bitcoin as hedge against inflation
Longtime hedge fund manager Paul Tudor Jones is reportedly using an investment in bitcoin as a hedge against inflation. Jones, one of Wall Street’s seasoned and most-successful fund managers, reportedly said in a memo that one of his funds holds a low single-digit percentage in futures on the cryptocurrency as central banks around the globe print money to combat the impact of Covid-19 on the economy. Some investors worry that the mass influx of cash from the Fed and others could spark a sharp rally in inflation in the future and are using other stores of value, such as gold and bitcoin, to protect themselves from a spike in prices. — Franck
1:35 pm: NYSE advancers lead decliners 4-1
Roughly four stocks at the New York Stock Exchange traded higher for every decliner as the broader market rebounded from its first decline in three days. Overall, 2,267 NYSE-listed stocks were higher whiled just over 560 declined, according to FactSet data. —Imbert
1:15 pm: Some airlines are thriving in the Covid-19 pandemic. They carry cargo.
Cargo airlines are proving a bright spot in the airline industry in the coronavirus pandemic that has roiled air travel demand for their passenger-carrying counterparts. Atlas Air and ATSG, both Amazon contractors with their own air-freight businesses, are reaping the rewards of strong demand in air cargo and a capacity crunch resulting from passenger carriers parking close to two-thirds of the world’s fleet to match paltry demand. Cargo from medical supplies, food and other goods that require a speedy delivery are going to cargo airlines instead of passenger planes’ bellies. Atlas shares rose close to 7% Thursday and are up more than 47% this quarter, after issuing a sunny forecast. ATSG’s stock down less than 1% but up close to 16% this quarter. In comparison, the four largest U.S. airlines’ shares are down more than 20% since the start of the second quarter. — Josephs
1:00 pm: Lyft, Peloton headline midday movers
Here are the companies making headlines in midday trading.
Lyft – Shares jumped more than 23% after the company beat revenue estimates for the first quarter. The ride-hailing company lost an adjusted $1.09 per share for the quarter, worse than the 63 cents loss analysts had been expecting, but revenue topped estimates and rose 23% year over year. The number of active riders increased by 3% year over year.
Peloton – Shares of the exercise company surged more than 13% after it said sales jumped 66% year over year, fueled by people staying home amid the coronavirus pandemic. The company lost 20 cents per share on $524.6 million in revenue. — Pound
12:15 pm: Payments stocks rally on strong user data
Payments companies PayPal and Square both saw positive data coming out of the coronavirus lockup period as consumers increase their e-commerce spending. PayPal’s daily number of transactions accelerated throughout the month, growing from the beginning of April until month end by 25%, the CEO said on the earnings call. Citi said momentum in April leads the firm to raise its price target from $145 to $131 per share. “PayPal can benefit from an accelerated shift towards digital,” Citi told clients. Despite the strong numbers, PayPal missed on the top and bottom lines of its quarterly results. The company earned 66 cents per share on revenue of $4.62 billion, while analysts polled by Refinitiv expected earnings of 75 cents per share on revenue of $4.74 billion. Shares of PayPal are up 12% on Thursday.
Similarly, Square’s CFO said its Cash App generated 112% profit growth in March. “In March and then again in April, Cash App set new highs for its number of net-new monthly transacting actives,” Square CFO Amrita Ahuja said on the earnings call. Square reported a loss of 2 cents per share, while analysts were forecasting earnings of 13 cents per share, according to Refinitiv. Morgan Stanley said the downturn makes Square look more like a bank. Shares of the payments company surged 10% on Thursday. —Fitzgerald
12:00 pm: Markets at midday: Nasdaq positive for 2020
Around midday, the Nasdaq Composite was poised to close higher for the year as tech shares added to their strong gains of late. The index traded more than 1.5% higher, putting it up about 0.2% year to date. The Dow also rose by about 400 points, or 1.6%, while the S&P 500 advanced 1.7%. —Imbert
11:48 am: Energy downgraded to underweight at CFRA
CFRA downgraded the energy sector to underweight from marketweight following the recent rally. “After rising 60% from the 3/23/20 low through 5/5/20, which was more than twice that for the S&P 500, the sector will again soon underperform the overall market,” the firm said. Chief Investment Strategist Sam Stovall said he doesn’t envision demand returning to pre-coronavirus levels anytime soon, and said that supply is likely to stay elevated. – Stevens
11:00 am: Coronavirus recession most similar to 2001, RayJay strategist says
Raymond James strategist Tavis McCourt says this U.S. recession, which has been sparked by the coronavirus pandemic and subsequent shutdown of the economy, is most similar to the one experienced in 2001. “Both entered at reasonably expensive P/Es, and both featured an exogenous impact to EPS, and in both cases markets rallied meaningfully following fiscal/monetary stimulus after the initial drop,” McCourt wrote in a note. “We note the 2001 equity market faded meaningfully in 2002 as what had previously been an expectation of a “V” shape recovery (+20% growth in 2002) became a “U” shape recovery with EPS flat in 2002 vs. 2001.” — Imbert, Bloom
10:50 am: Beyond Meat could grow into a mega-cap stock, Cramer says
Jim Cramer continued to praise Beyond Meat on Thursday’s “Squawk on the Street,” saying that the pandemic should accelerate the shift to plant-based meat and that the company had the potential to grow into one of the biggest in the world. Beyond Meat is fairly small right now, Cramer noted, but, “so was Amazon, so was Facebook, so was Alphabet.” —Pound
10:20 am: Indexes rally as energy and financials lead; EOG Resources, Citizens Financial both up 5%
Energy and financials stock led the S&P 500 and Dow industrials higher in Thursday morning trading as optimism about gradual reopening and a slower pace of jobless claims persuaded some investors that the worst of the Covid-19 economic pullback may have already passed.
Houston-based EOG Resources, which produces crude oil and natural gas, rose 5% on the heels of a bounce in crude based on production cuts and demand beginning to recover. Citizens Financial, a regional bank that generates revenues from consumer and small-business loans, also rallied 5% on prospects U.S. income may be starting to rebound. Big-tech stocks like Amazon, Netflix and Google-parent Alphabet helped carry the Nasdaq Composite back into positive territory for 2020 after a steep decline in March. Those stocks are all up at least 15% this quarter and are positive for 2020. — Franck
10:13 am: This “impressive” stock is a coronavirus “beneficiary” Bank of America says
Cloud communications platform company Twilio reported earnings on Wednesday after the bell beating results and guidance for the fiscal first-quarter. Bank of America reiterated its buy rating, calling the stock a “top pick” as it continues to take advantage of the coronavirus crisis. “As we had expected TWLO saw revs/usage upside and was a net beneficiary of COVID impact, offsetting weakness from high impact industries travel, hospitality, ridesharing at <10% of revs, in line with our customer survey," the analyst said. Shares of the company are up over 50% this week. — Bloom
9:50 am: Biggest analyst calls of the day: Lyft, General Motors, Ralph Lauren & more
- Deutsche Bank upgraded General Motors to buy from hold.
- JPMorgan added T-Mobile to the focus list.
- HSBC upgraded Tapestry to buy from hold.
- Piper Sandler downgraded Lyft to neutral from overweight.
- Cowen downgraded Ralph Lauren to market perform from outperform.
- Gordon Haskett lowered its price target on General Electric to $5 from $9. — Bloom
9:40 am: Oil surges, on track for best week ever
Oil prices jumped on Thursday, supported by ongoing production cuts as well as the start of a recovery in demand. West Texas Intermediate, the U.S. benchmark, rose $2.24, or 9.3%, to trade at $26.23 per barrel. For the week WTI has gained nearly 33%, putting the contract on track for its best week in history. International benchmark Brent crude traded 6% higher at $31.50. Government data released Wednesday showed that production in the U.S. has declined by more than 1 million barrels per day from the peak in March. Demand for gasoline also rose, although it’s still more than 30% below normal levels. – Stevens
9:40 am: Nasdaq Composite goes positive on the year
With a 1.4% gain at Thursday’s open, the tech-heavy Nasdaq Composite officially erased its 2020 losses and turned positive on the year. The strength in the benchmark comes from the impressive rally from the biggest U.S. technology firms. Amazon has soared 27% this year, while Netflix and Microsoft gained 34% and 16%. –Li
9:30 am: Dow jumps 260 points at the open
Stocks opened Thursday’s session with solid gains as investors took the latest unemployment data in stride. The Dow Jones Industrial Average climbed about 260 points at the open, while the S&P 500 and the Nasdaq gained about 1.3% each. –Li
9:15 am: Zoom shares jump after company announces first acquisition
Zoom shares gained more than 3% during Thursday’s premarket trading after the company said it bought Keybase in an effort to shore up its security operations. The acquisition will add end-to-end encryption for the company’s video calls. Zoom shares have more than doubled this year on the heels of a spike in demand as people began working from home. But the company has also been criticized for privacy and security flaws. On April 1 the company outlined a plan for how it can fix its security issues, and Thursday’s acquisition is part of that plan. – Stevens
9:00 am: The worst of coronavirus crisis is likely past us, Boockvar says
Some investors are taking solace in the fact that the latest jobless claims number marks a decline from previous readings, which could signal that the worst of the coronavirus impact is behind us. “As awful these figures are, it is the least amount of claims since mid March as we’ve likely cycled through the worst of the forced shutdown,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “We can now start analyzing the pace of reopenings, the level of business and what that new reality will look like.” Despite more than 3 million weekly jobless claims, Dow futures are up 300 points. –Li
8:32 am: Weekly jobless claims total 3.169 million
A total of 3.169 million Americans have filed for unemployment benefits in the week ending May 2, the Labor Department said Thursday. Economists polled by Dow Jones expected jobless claims to rise by 3.05 million. The latest number brought the seven-week tally to more than 33 million as the coronavirus pandemic caused unprecedented job losses. While another bad number, the jobless claims were below the 3.8 million and 4.4 million pace of the prior two weeks and down from the 6.8 million jobs lost at the end of March. Some investors took this to mean that maybe the worst job losses are behind us. — Li
8:15 am: Stifel calls Peloton an “unstoppable juggernaut,” raises price target to $50
Wall Street firm Stifel raised its price target to $50 per share on stay-at-home stock Peloton on Thursday on the back of the fitness companies earnings. Stifel said the target increases is spurred by Peloton’s better-than-expected outlook for the next quarter and “favorable demand dynamics.” Peloton said stay-at-home orders sparked a 66% jump in sales during the quarantine. “This company is an unstoppable juggernaut to be stopped only by way of self-inflicted wound from here,” Stifel’s Scott Devitt told clients. “Peloton is in the early stages of building the world’s first global fitness platform.” Stifel has a buy rating on Peloton’s stock, which is up more than 18% in premarket trading on Thursday. – Fitzgerald
8:01 am: Moderna surges 16% in premarket after FDA approves vaccine phase 2 trial
The Food and Drug Administration has cleared Moderna‘s coronavirus vaccine for a phase 2 trial, sending the biotech shares jumping more than 16% in premarket trading on Thursday. Moderna said the trials will begin shortly with 600 participants, and it is finalizing plans for a phase 3 trial as early as this summer, which would potentially approve the first batch of vaccines as soon as 2021. –Li
7:45 am: Jobless claims expected to rise by 3 million
Economists polled by Dow Jones expect just over 3 million Americans to have filed for unemployment benefits in the week ending May 2. That would bring the seven-week total to about 33 million as the coronavirus pandemic forces massive layoffs across industries. However, the rate of new jobless claims has been steadily falling in recent weeks. Also, a print of 3 million would be lower than the previous number of 3.84 million. —Imbert
7:42 am: Lyft shares gain 16% after revenue jumps 23% year-over-year
Shares of Lyft rose 16% in premarket trading following the company’s first quarter earnings results. The ride-hailing company lost an adjusted $1.09 per share for the quarter, which was larger than the 63 cents loss analysts had been expecting, but revenue topped estimates and rose 23% year-over-year. The number of active riders increased by 3% year-over-year. Last Friday, the company said it was laying off or furloughing nearly 17% of its workforce in an effort to cut costs. –Stevens
7:36 am: Peloton shares surge after earnings
Peloton shares jumped 20% during Thursday’s premarket trading after the fitness equipment maker’s third quarter results. The company lost 20 cents per share, which was more than the 17 cents loss the Street had been looking for, but revenue beat estimates. Peloton said stay-at-home orders sparked a 66% jump in sales, and the company also raised its sales forecast for the current quarter. For the year the stock is up 21%, while the S&P 500 has shed nearly 12%. –Stevens
7:27 am: Stock futures point to rebound on Wall Street
U.S. stock futures rose sharply, putting Wall Street on track to rebound from Wednesday’s decline, ahead of key unemployment data. Dow Jones Industrial Average futures were up more than 200 points, or 1.1%. S&P 500 and Nasdaq 100 futures climbed 1.3%. A 9.1% surge in West Texas Intermediate futures helped sentiment in equity futures. Those gains in stock and oil futures came ahead of the Labor Department’s weekly jobless claims report, which is slated for 8:30 a.m. On Wednesday, the Dow and S&P 500 closed lower for the first time in three sessions as investors weighed the possibility of the economy reopening soon. —Imbert
— CNBC’s Maggie Fitzgerald, Thomas Franck, Jesse Pound, Leslie Josephs and Michael Bloom contributed reporting.
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