Stocks closed sharply higher on Friday, completing two weeks of consecutive gains after policymakers ramped up talk of reopening the coronavirus-battered economy, while a major drugmaker’s progress with a COVID-19 treatment fueled optimism about the potential to keep the virus in check.
The Dow, S&P 500 and Nasdaq all posted back-to-back weekly gains, the first time since the week ended February 14. The blue-chip index rallied by just over 3%, while the Dow rose 2.2% and the Nasdaq soared 6% on the week.
The COVID-19 crisis has taken a heavy toll across the world — as revealed in new data that showed China’s economic output swooned by 6.8% in the first quarter as the coronavirus outbreak hammered the world’s second largest economy. It marked the first quarterly economic contraction the country has posted since official records began.
The rally got a serious boost after medical publication STAT reported that a Gilead (GILD) antiviral treatment was driving “rapid recoveries in fever and respiratory symptoms” for individuals with COVID-19. Gilead’s stock jumped on the news, and closed Friday’s session 9.7% higher.
Improving prospects for an antiviral treatment or vaccine – which other health-care giants including Johnson & Johnson have also been racing to develop – sparked a surge in optimism among equity traders. The SPY exchange-traded fund (SPY) tracking the S&P 500 jumped more than 2% in late trading following the report.
In the U.S., the coronavirus has so far sickened more than 672,000 individuals, and killed more than 30,000, according to real time data tracked by Johns Hopkins.
But weeks’ worth of strict social distancing measures across the country, and especially in some of the nation’s largest cities, is helping to “flatten the curve” of new hospitalizations and cases, emboldening talk of restarting public life that’s been in suspended animation.
The Trump administration briefed governors on Thursday about a three-phase blueprint for economic reopening, leaving it to the states to move through each phase at their own paces and ensure testing, surveillance and contingency plans remain in place in case another wave of infections arises.
But with case counts still elevated in absolute terms, some of the states hardest hit by the coronavirus virus doubled down on their current social distancing standards, at least for the near-term. New York Governor Andrew Cuomo on Thursday extended the shutdown in the state, the hardest hit by the coronavirus, to May 15, in coordination with other Northeast states.
—
4:00 p.m. ET: Stocks post first back-to-back weekly gains since mid-February
Stocks rose Friday afternoon, with a late-afternoon rally sending the Dow up more than 700 points by market close.
Here’s where the markets settled at the end of regular equity trading Friday:
S&P 500 (^GSPC): +75.01 points (+2.68%) to 2,874.56
2:45 p.m. ET: Crude oil prices plunge below $19 per barrel as demand shock continues to dent energy prices
U.S. West Texas intermediate crude oil May futures (CL=F) settled lower by 8.1% on Friday to a fresh 18-year low of $18.27, extending oil’s inexorable price declines.
The drop brought the commodity’s weekly losses to 20%, as optimism over last week’s OPEC+ output cut was quickly vanquished as investors considered ongoing demand destruction due to the coronavirus pandemic.
—
1:00 p.m. ET: It’s good to be an online retailer
BRAZIL - 2019/06/26: In this photo illustration a Shopify logo seen displayed on a smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)
The biggest beneficiaries of widespread social distancing have been Amazon, Netflix (NFLX) and Zoom — but Shopify (SHOP) is coming on strong.
The stock is testing new records after CTO Jean-Michel Lemieux said the e-commerce company is seeing “Black Friday” levels of traffic on a daily basis. “It won’t be long before traffic has doubled or more,” he added.
—
12:25 p.m. ET: The ‘go outside’ rally
Amanda Agati, PNC chief investment strategist, explained to Yahoo Finance why the bank is skeptical over Friday’s price action, which she called “a sell the ‘stay-at-home’ basket and buy the ‘go outside’ basket.”
Consumer oriented stocks are rallying, while some of the names associated with social distancing — ie Amazon (AMZN) and Zoom (ZM) — are retracing their gains. That said, “it really hasn’t been a broad-based rally. Frankly the only thing the market cares about is virus data,” Agati said.
—
12:15 a.m. ET: King dollar is here to stay
Although President Donald Trump, who’s frequently advocated for a weaker currency, may not appreciate it, there are a host of reasons why a strong dollar (DX=F) is here to stay — and the coronavirus crisis is unlikely to change that dynamic.
Indeed, the pandemic may reinforce those underpinnings, even as the U.S. struggles to come up with a plan to reopen the economy. In an analysis, Eric Lorber and Jonathan Schanzer from the Foundation for the Defense of Democracies break down several reasons the greenback is still the best of the FX lot:
Business owners worldwide understand that if the crisis continues, they will need significant capital reserves to stay afloat during this severe economic contraction. Fearing a liquidity crunch, where the demand for cash significantly outstrips the supply, they are snapping up dollars while the getting is good. Businesses understand that deep US financial markets are the key to weathering difficult economic headwinds. They also appreciate the transparency of America’s fiscal policies. The dollar is more than simply the chief reserve currency; it is the currency that companies turn to in moments of crisis, a role it has played during other economic crises as well.
While there are definitive downsides to having a perpetually strong currency, the U.S. is not an export-reliant economy (unlike Japan and some European countries). Moreover:
The consistent, global demand for the dollar, not to mention US treasury bonds, gives the United States real leverage. When it comes to China, for example, the strength of the dollar provides a shield for the United States, ensuring a robust market for the purchase of US treasuries, even if China attempted to sell off its estimated $1.2 trillion worth of US bonds in an effort to weaken our financial system. Such a move would be unlikely, but not without precedent.
—
11:33 a.m. ET: Stocks pare some gains but remain in positive territory
Stocks pared some gains as the trading session rolled on. Advances in the S&P 500 were led by the Energy and Financials sectors, which each had been laggards earlier in the week. Boeing led advances in the Dow.
Here were the main moves in markets, as of 11:33 a.m. ET:
S&P 500 (^GSPC): +34.24 points (+1.22%) to 2,833.79
10:05 a.m. ET: Conference Board’s Leading Economic Index drops by most on record in March amid economic distress
The Conference Board’s Leading Economic Index (LEI) dropped by 6.7% in March after a 0.2% decrease in February, bringing the index to 104.2. The margin of decline was the greatest since the Conference Board initiated the LEI 60 years ago.
The LEI weighs various data points on the economy – including those on the labor and housing markets, manufacturing activity, consumer sentiment and stock prices – to signal directions in the business cycle.
“In March, the U.S. LEI registered the largest decline in its 60-year history,” Ataman Ozyildirim, senior director of economic research at The Conference Board, said in a statement. “The unprecedented and sudden deterioration was broad based, with the largest negative contributions coming from initial claims for unemployment insurance and stock prices. The sharp drop in the LEI reflects the sudden halting in business activity as a result of the global pandemic and suggests the US economy will be facing a very deep contraction.”
—
9:43 a.m. ET: Optimism after Gilead report may be premature, some analysts say
A STAT report showing promising signs that Gilead’s remdesivir antiviral treatment was helping drive “rapid recoveries” in COVID-19 patients in Chicago sent markets on a tear overnight and into Friday morning. But hopes that the treatment will be anything resembling a panacea for the pandemic in the near-term could be overly optimistic, according to some analysts.
“While the article paints a pretty picture, we think the ensuing exuberance shows a lack of critical analysis,” analysts at Baird Equity Research wrote in a note Friday. “This is uncontrolled, anecdotal data, which often winds up not being confirmed in controlled studies.”
7:20 a.m. ET: Procter & Gamble earnings beat expectations, maintains 2020 organic revenue and core EPS outlook
Procter & Gamble (PG) delivered fiscal third-quarter earnings that topped consensus expectations, as the company saw a boost in demand in North America and parts of Europe as consumers stocked up on essentials during the COVID-19 outbreak.
Core earnings per share (EPS) for Procter & Gamble’s totaled $1.17, or four cents better than expected. Net sales of $17.21 billion were slightly below estimates for $17.33 billion. Top-line growth was led by the company’s fabric and home care division, where organic sales rose 10% versus 7% in the year-ago quarter, and in health-care, where organic sales rose 9% versus 5% last year.
For the full year, Procter & Gamble maintained its outlook for organic revenue – which strips out impacts from currency exchange, acquisitions and divestures – to grow between 4% and 5%. Full-year core EPS is expected to rise between 8% and 11%.
P&G said it expects to pay more than $7.5 billion in dividends and buy back as much as $8 billion in common shares for the full fiscal year.
6:01 p.m. ET Thursday: Stock futures open sharply higher
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:01 p.m. ET Thursday:
S&P 500 futures (ES=F): up 77.75 points, or +2.79% to 2,865.25
Dow futures (YM=F): up 681 points, or +2.91% to 24,088.00
Nasdaq futures (NQ=F): up 188 points, or +2.15% to 8,922.25
A view of a nearly deserted Broad street and the New York Stock Exchange building in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 3, 2020. REUTERS/Mike Segar
