Even in this new stay-at-home, increasingly jobless economy, some businesses are making out as clear winners, and gains for Amazon, health care companies and stocks in other pockets of the market helped prop up Wall Street Thursday.
The market opened timid, but momentum picked up in the last minutes of trading after the White House released guidelines outlining a phased approach to reopening businesses, schools and other areas of life.
The S&P 500 rose 16.19 points to 2,799.55. The Dow Jones Industrial Average added 33.33 points, or 0.1%, to 23,537.68, the Nasdaq jumped 139.19, or 1.7%, to 8,532.36 and the Russell 2000 index of smaller stocks slumped 5.89, or 0.5%, to 1,178.09.
The S&P 500 rose 0.6% after flipping between small gains and losses following a government report that 5.2 million Americans filed for unemployment benefits last week. The report was universally regarded as awful, and it brought the total for the last month to roughly 22 million.
But markets had braced for a number that was even more awful, which helped limit losses for stocks.
The day’s move for the S&P 500 was one of its mildest since the coronavirus outbreak began knocking stocks lower two months ago. But it belied some churn underneath, as losers in the index outnumbered winners.
“We know the numbers are not going to be good, but companies can show they’ve taken steps to stop the cash drain or that they’ve positioned themselves well,” said Sal Bruno, chief investment officer at IndexIQ.
Amazon, Dollar General and Walmart all closed at record highs as people stock up on staples. Netflix also reached an all-time high as people spend more time than ever at home, while health care stocks in the S&P 500 rose 2.2% for the biggest gain among the 11 sectors that make up the index.
The losers in the coronavirus pandemic, meanwhile, took yet more hits. United Airlines sank 11.5% for the one of the worst slides in the S&P 500 after its CEO told employees that demand for travel “is essentially zero and shows no sign of improving in the near term.”
Treasury yields fell again and remain extremely low, though, which shows how pessimistic investors are about the economy’s prospects.
Thursday’s meandering trading offered a milder microcosm of the up-and-down lurches that stocks have been cycling through in recent weeks as traders try to guess how long and how deep the upcoming recession will be.
On one hand, investors see the severe economic damage caused by the pandemic. Besides the jobless report, data released Thursday showed that homebuilders broke ground on fewer homes than expected last month. A survey of manufacturers in the mid-Atlantic region fell below the low point during the Great Recession.
On the other hand, some optimistic investors are focusing on massive aid for the economy promised by the Federal Reserve and the U.S government. They also point to recent signs that the outbreak may be leveling off in some of the world’s hardest-hit areas, which could open the path to reopening parts of the economy.
The dueling sentiments have helped the S&P 500 nearly halve its loss since falling from its record high in mid-February. Stocks were down by nearly 34% in late March, but a recent rally has trimmed the loss to roughly 17%.
Ultimately, many professional investors say they expect the market to remain volatile until the worst of the outbreak passes.
“This is a consumer-led economy,” said Prudential’s Krosby. “The question is: At what point does the consumer feel comfortable enough to begin even a quasi-normal life outside their homes?”
As a sector, financial stocks weighed heaviest on the market with banks continuing their weeklong slide. Worries are high that business-shutdown orders — and the punishing sweep of layoffs they’re causing — will force households and businesses to default on billions of dollars of loans. JPMorgan Chase lost 3.8%, and Citigroup slid 5.5%.
Energy companies and owners of shopping malls were also hard hit as people stay at home amid efforts to slow the spread of the virus. Simon Property Group lost 13.3%, and Occidental Petroleum fell 10.4%.
Analysts see the separation of winners and losers as an encouraging sign for the market. Earlier in the sell-off, fears about the impending recession pulled the plug for stocks across sectors.
"We had a market that was dotted with indiscriminate selling," said Quincy Krosby, chief market strategist at Prudential Financial. "Now you have a differentiation within the market, which indicates a healthier backdrop."
U.S. stocks were mixed at the opening bell after the U.S. Department of Labor announced 5.2 million more Americans filed weekly jobless claims last week amid the coronavirus pandemic.
The Dow Jones Industrial Average was down sharply compared to the other two major indexes, which moved the needle slightly higher.
The number of new jobless claims fell by 1.37 million from the week before but the newest figure was no less staggering in assessing the growing economic toll due to the prolonged shutdown.
The new claims add to the 17 million laid off in the previous three weeks.
What it means
The sharp rise to 22 million unemployed is one of the most painful results of an economic lockdown that governments around the world have enforced to contain the spread of the new coronavirus.
The job losses so far have nearly wiped out all the job gains from the past 12 years.
The tone was also darkened Wednesday after a separate report showed that U.S. retail sales and factory output plunged in March. The retail figures hit especially hard because consumer spending is two-thirds of the U.S. economy.
The announcements shook investors who economists have warned are too optimistic about a quick rebound from what is shaping up to be the deepest global slump since the Great Depression of the 1930s.
“Boy, were U.S. data a rude awakening,” said Riki Ogawa of Mizuho Bank in a report.
Previously
The U.S. retail sales decline exceeded the previous record decline of 3.9% during the Great Recession in November 2008.
Auto sales dropped 25.6%, while clothing store sales plunged 50.5%. Restaurants and bars reported a nearly 27% fall in revenue.
Spending may be falling at an even faster pace than retail figures suggest. Those data don’t include spending on services such as hotel stays, airline tickets or movie theaters, industries that have been largely shut down by anti-virus controls.
Also Wednesday, the Federal Reserve Bank of New York said its gauge for manufacturing in New York state fell by its biggest monthly margin in April. The index is at its lowest level on record.
The litany of bad news has made leaders all the more eager to send people back to work and school and rebuild economies devastated by the pandemic.
For the week:
- The S&P 500 is up 9.73 points, or 0.3%.
- The Dow is down 181.69 points, or 0.8%.
- The Nasdaq is up 378.79 points, or 4.6%
- The Russell 2000 is down 68.64 points, or 5.5%.
For the year:
- The S&P 500 is down 431.23 points, or 13.3%.
- The Dow is down 5,000.76 points, or 17.5%.
- The Nasdaq is down 440.24 points, or 4.9%
- The Russell 2000 is down 490.38 points, or 29.4%.
What to expect next
Traders say stocks will be volatile until investors can see more clearly when countries might be able to stop the outbreak.
Investors are focusing on how and when authorities may begin to ease business shutdowns and limits on people’s movements.
President Donald Trump has been discussing how to roll back federal social distancing recommendations and is targeting May 1 to get the U.S. economy rolling again. U.S. governors are collaborating on plans to reopen their economies in what is likely to be a gradual process to prevent the coronavirus from rebounding.
With millions of job losses worldwide, “the more lasting damage to confidence and labor market shocks is also being under-estimated, and these may not recover in tandem with the pandemic,” said Mizuho's Ogawa.
Any notion of a “V-shaped recovery” in this economic recession once anti-virus controls are lifted “is now being questioned more seriously,” Ogawa said.
Oil prices
OPEC, the international governing body for petroleum policies and exports, said in a monthly report Thursday that the global oil market is undergoing “historic shock” due to virus mitigation measures that have decimated demand.
The price of oil stabilized after touching another 18-year low on Wednesday, when the International Energy Agency forecast that global demand for crude will fall this year by a record amount.
Benchmark U.S. crude gained 27 cents to $20.14 per barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract touched its lowest price since 2002 before recovering to $19.87. Brent crude, used to price international oils, advanced $1.14 to $28.83 per barrel in London. It fell $1.91, or 6.5%, the previous session to $27.69.
Europe, Asian markets
Japanese Prime Minister Shinzo Abe expanded a state of emergency to the entire nation Thursday to slow the spread of COVID-19.
China has reopened factories, shops and other businesses after declaring victory over the outbreak, but forecasters say it will take months for industries to return to normal output, while exporters will face depressed global demand.
In Europe, London’s FTSE 100 gained 0.4% to 5,621 and Frankfurt's DAX rose 1% to 10,379. The CAC 40 in Paris added 0.5% to 4,376.
The dollar advanced to 107.66 Japanese yen from Wednesday's 107.43 yen. The euro fell to $1.0874 from $1.0911
In Asia, Tokyo’s Nikkei 225 fell 1.3% to 19,290.20 and the Hang Seng in Hong Kong lost 0.6% to 24,006.45. Sydney’s S&P-ASX 200 lost 1.3% to 5,397.60.
The Shanghai Composite Index gained 0.3% to 2,819.94. Seoul's Kospi ended unchanged at 1,857.07 after swinging between gains and losses.
India’s Sensex gained 1.1% to 30,716.93. New Zealand’s main index added 0.6% while Singapore gained and Thailand and Jakarta retreated.
— ArLuther Lee contributed to this report for The Atlanta Journal-Constitution.
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