Investors assessed another abysmal weekly jobless claim report that brought the total of Americans filing for unemployment benefits to 22 million since mid-March. Big growth tech stocks built on their momentum once again, with Netflix, Amazon and Microsoft outperforming the broad market. Here’s what’s happening:
10:12 am: Hedge fund Elliott says stocks could fall 50% from February highs
Billionaire Paul Singer’s Elliott Management said global stocks could tumble more — ultimately losing half of their value from February’s high— as the world braces for the deepest recession since the 1930s-era Great Depression, according to a letter sent to clients on Wednesday and reviewed by Reuters. “Our gut tells us that a 50% or deeper decline from the February top might be the ultimate path of global stock markets,” the letter said. The New York-based hedge fund manages $40.4 billion in assets. — Li
10:10 am: Analysts say buy stay-at-home stocks like Netflix & Kraft Heinz in Thursday’s calls of the day
- Goldman Sachs raised its price target on Netflix to $490 from $430.
- JPMorgan raised its target price on Netflix to $480 from $410.
- Wells Fargo upgraded Kraft Heinz to overweight from equal weight.
- Bank of America resumed coverage of Monster Beverage as buy.
- JPMorgan downgraded Twitter to neutral from overweight.
- Berenberg initiated Roku as buy.
- Raymond James downgraded Square to underperform from market perform.
- Credit Suisse upgraded Smucker to neutral from underperform.
CNBC Pro subscribers can read more here. — Bloom
10:05 am: ConocoPhillips to cut production by 225,000 gross barrels of oil per day
ConocoPhillips said Thursday that it will voluntarily cut production by 225,000 gross barrels of oil per day. The announcement came as part of a broader statement where the exploration company outlined additional savings of $3 billion, bringing the total cost cuts to more than $5 billion. “These actions reflect our view that near-term oil prices will remain weak, largely due to demand impacts from COVID-19 and continued oil oversupply,” CEO Ryan Lance said in a statement. Shares were about 3% lower on the news. – Stevens
9:36 am: Stocks give up gains, Dow now down 100 points
The 30-stock Dow quickly erased the opening gains, now down about 120 points. The S&P 500 and the Nasdaq were still in the green as gains in big tech provided some support. — Li
9:31 am: Dow opens slightly higher
Stocks rose slightly after the opening bell as investors digested a fresh batch of corporate earnings and another dismal jobless claims report. The Dow Jones Industrial Average rose about 50 points, while the S&P 500 climbed 0.6%. The Nasdaq Composite traded 1% higher, lifted by a 2% jump in Netflix shares. — Li
9:04 am: Costco raises dividend by 7.7%
Bucking the trend in corporate America, Costco is raising its dividend. The big-box retailer said it would increase its dividend by 7.7%, bringing it to 70 cents per share, or $2.80 on an annualized basis. Shares were about 1% higher in premarket trading, and have gained more than 5% this year. The S&P 500, for comparison, has shed roughly 14% this year. – Stevens
9:00 am: Goldman becomes one of the biggest bulls on Netflix, says earnings to blow past Street
Netflix’s stock has more room to run, poised to get a boost by the streaming platform’s blowout earnings next week, according to Goldman Sachs. The Wall Street firm hiked its 12-month price target on Netflix to $490 per share from $430 per share, implying nearly 15% upside from Tuesday’s closing price of $426.75 per share. Goldman’s new price target makes it tied on the Street for the highest forecast on Netflix, according to FactSet. Pivotal also has a $490 target price. “As one of the few companies experiencing increased demand in the current environment, we expect shares will continue to outperform,” Goldman Sachs equity analyst Health Terry said in a note to clients. Plus, Goldman has high hopes for the streaming company’s earnings next week. “We expect Netﬂix to report 1Q results well above guidance, with over 10mn net subscriber additions, and provide initial guidance for 2Q ahead of FactSet Consensus,” said Terry. Goldman believes Netflix will report 10.3 million total paid subscribers in the first quarter, well ahead of guidance of 7 million and consensus of 7.8 million. – Fitzgerald
8:54 am: March US housing starts drop 22.3% to 1.216 million vs 1.3 million expected
8:52 am: United Airlines slashes May schedule by 90%
With airplanes grounded worldwide, United Airlines said that it would cut its May schedule by 90%. “To help you understand how few people are flying in this environment, less than 200,000 people flew with us during the first two weeks of April this year, compared to more than 6 million during the same time in 2019, a 97 percent drop,” CEO Oscar Munoz said in a statement. “We expect to fly fewer people during the entire month of May than we did on a single day in May 2019,” he added. Munoz said the airline would also likely scale back its June schedule, while also warning about possible job cuts. United shares slid more than 2% during Thursday’s premarket trading, and are down 63% this year. – Stevens
8:41 am: Market bottom is likely in, strategist Tom Lee says
Tom Lee, founder of Fundstrat Global Advisors, says the market bottom is likely in after the S&P 500 retraced half of its downside move from Feb. 19 to March 23. “We are in a bull market recovery, as bizarre as it sounds,” Lee wrote in a note to clients. “The market has shifted into the hands of “buyers” whereas sellers were in complete control from 2/19/2020 to 3/23/2020.” —Imbert
8:31 am: US weekly jobless claims total 5.245 million vs 5.0 million estimate
The Labor Department said a total of 5.245 million Americans filed for state unemployment benefits for the week ended April 11, versus the Dow Jones estimate of 5 million. The number marks a decline from 6.6 million in the prior week. The new filings bring the crisis total to just over 22 million, nearly wiping out all the job gains since the Great Recession. —Li
8:25 am: Jeff Bezos: Widespread coronavirus testing needed before economy can get running again
Jeff Bezos on Thursday published Amazon’s annual shareholder letter, in which he detailed how the company has responded to the coronavirus pandemic so far. Bezos stressed the importance of testing in order for the public to return to work, as well as for his own employees to be protected from the virus. He pointed to Amazon’s efforts to develop “incremental testing capacity,” which the company announced last week. As part of that announcement, Amazon said it hopes to begin testing all of its employees, including those who show no symptoms. “Regular testing on a global scale, across all industries, would both help keep people safe and help get the economy back up and running,” Bezos said. “For this to work, we as a society would need vastly more testing capacity than is currently available.” – Palmer
8:20 am: Market losing momentum in recent days, strategist says
The market’s rip-roaring rally off the March 23 lows has lost some momentum in recent days, technical strategist Mark Newton said in a note. “While the trends remain quite positive near-term, there has been some slowdown in both breadth and momentum … and the rally into Tuesday’s highs ahead of Wednesday’s decline showed definite signs of negative momentum divergence while breadth has gotten weaker.” The major averages all rose more than 2% on Tuesday, but then dropped over 1% on Wednesday.
“The takeaway is that markets DO show evidence of some internal issues that “could” lead to a decline. However, this also could simply lead to minor consolidation that ends up leading equities higher into late April,” said Newton, managing member of Newton Advisors. —Imbert
8:16 am: Oil in the green after falling to its lowest level in more than 18 years
U.S. oil moved higher on Thursday, one day after settling at $19.87, a level not seen since February 2002. West Texas Intermediate, the U.S. benchmark, rose 19 cents to trade at $20.06, while international benchmark Brent crude traded $1.03 higher at $28.72 per barrel. If WTI can hold onto its gains throughout the session, it will be the contract’s first positive day in 5. Oil moved lower on Wednesday after the U.S. Energy Information Administration said that inventory surged by a record 19.2 million barrels for the week ending April 10 as the coronavirus pandemic continues to sap demand. Additionally, the IEA said in its monthly report that oil demand could fall by 29 million barrels per day in April, driving demand to its lowest level in 25 years. On Sunday OPEC and its allies announced a record 9.7 million bpd production cut beginning on May 1, but the move has done little to assuage traders’ fears about the slowdown in demand. Since the deal was finalized on Sunday WTI has dropped more than 12%. – Stevens
7:55 am: Global virus cases top 2 million, Trump to announce reopening guidelines
There have now been more than 2 million confirmed cases of the coronavirus worldwide, according to data from Johns Hopkins University. The United States has the most confirmed cases with more than 630,000. Spain, Italy, German and France all have seen more than 100,000.President Donald Trump said on Wednesday night that he would release guidelines for states to reopen their economies on Thursday.There have been at least 138,008 deaths due to the virus worldwide, including more than 30,000 in the U.S., according to Johns Hopkins. — Pound
7:50 am: Schumer, Pelosi to continue talks with Treasury over additional virus relief
7:48 am: US jobless claims expected to hit 5 million, release due at 8:30 am ET
The Labor Department is scheduled to release at 8:30 a.m. ET its report on the number of Americans who filed for state unemployment benefits last week. Economists polled by Dow Jones expect initial claims for the week ended April 11 to total 5 million, a decline from 6.6 million in the prior week but still an eye-popping number on a historical basis. Thursday’s release could see the U.S. economy clinch an important milestone amid the coronavirus outbreak: the erasure of all of the nonfarm job gains since the throes of the Great Recession and financial crisis if claims exceed 5.662 million. — Franck
7:45 am: S&P 500 ‘back to expensive,’ says Bank of America
The S&P 500 is back to looking expensive, Bank of American equity and quant strategist Savita Subramanian said in a note to clients Thursday. Looking at 20 valuation frameworks, including trailing PE, EV/EBITDA and EV/sales, the firm found that the benchmark index is “richer” than average on many of these key metrics. The three exceptions are “lower than average Price to Free Cash Flow, cheaper relative to bonds and relative to gold.” From a momentum and value play standpoint Bank of America said health care, tech and communication services look the best, while materials, energy and consumer discretionary rank the worst. “Today’s valuations suggest S&P 500 annualized 10-yr price returns of 4%-5%. This is lower than average returns in prior decades and roughly half of the 8% annualized price return we’ve enjoyed since post-WWII (1947)…But if we consider total returns of 6% to 8% (assuming a dividend yield of 2% to 3%), US equities’ annualized returns are still very competitive with other similar-in-quality asset class returns,” Subramanian said. —Stevens
7:42 am: Morgan Stanley’s profit falls short, but trading beats estimates
Morgan Stanley on Thursday posted a first-quarter profit that missed analysts’ expectations, but the firm’s trading desks generated about $700 million more revenue than expected. The bank said in a release that earnings dropped 30% to $1.7 billion, or $1.01 a share, compared with the $1.14 estimate of analysts surveyed by Refinitiv. Shares of Morgan Stanley dipped 0.8% in premarket trading. – Son, Li
7:25 am: Stock futures point to modest gains at the open
Stock futures rose slightly on Thursday, following a big sell-off in the previous session, as both corporate results and economic data fueled concerns about an economic fallout caused by the coronavirus pandemic. Futures on the Dow Jones Industrial Average erased earlier losses and implied an opening gain of about 90 points. S&P 500 and Nasdaq futures also turned positive. Investors are bracing for Labor Department’s report on last week’s initial jobless claims at 8:30 a.m. ET, which economists polled by Dow Jones expected to total 5 million. — Li
— With reporting from Thomas Franck, Michael Bloom, Hugh Son, Jesse Pound, Fred Imbert and Lauren Hirsch.
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