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10:14 am: Shell’s dividend cut casts doubts on US majors, adds to negative market mood
Investors take what comfort they can in the dividends of big oil majors, like Exxon Mobil and Chevron. So Royal Dutch Shell’s dividend cut — its first since World War II — was unnerving for investors in the sector. The stocks of both Exxon and Chevron sagged Thursday morning after a week of gains. Both majors report earnings Friday, and dividend comments will be closely watched. Shell cut its dividend 66% to $0.16 per share. Its stock plummeted more than 11%. With energy stocks under pressure with this year, Exxon’s yield is 7.4% and Chevron’s was at 5.5%. — Domm
10:10 am: Consumers cut back most ever on services, and are saving most since 1975
Consumer spending on services fell the most ever in March, and Americans also saved their income at the highest rate since 1975.
Overall consumer spending fell 7.5% in March, the steepest decline in records that go back to 1959. Within that number, spending on services fell by 9.5%, the worst ever for a sector that was about 69% of consumer spending in February. Consumers make up about 67% of the economy. The worst decline previously was a 1.3% drop in services spending in September, 2001 after 9/11. The number was barely negative during the Great Recession, with a 0.3% decline in February, 2009.
“There’s nothing close. It’s the worst in history,” said Diane Swonk, chief economist at Grant Thornton. While Americans stopped spending, they also saved more — 13.1% of their income. The savings rate in March was the highest since the 17.3% in May, 1975 and rivals the level in the early 1980s recession, she said. — Domm
10:04 am: S&P 500 facing technical pressure near 3,000 level
Strategist Michael Shaoul pointed out in a note the S&P 500 is facing resistance around the 3,000 level after the average’s relentless rally this month. “This level can be expected to combine selling pressure from investors looking to lighten portfolios at attractive levels with pressure from systematic investors to flip to long positions if resistance is overcome,” Shaoul, chairman and CEO of Marketfield Asset Management, wrote in a note to clients. “Given the massive gains seen in April a straightforward “punch through” looks like a tall order, particularly since a lot of medical progress and economic recovery has already been discounted by the market.” —Imbert
9:55 am: ‘Did someone blow up?’ asks Cramer
Stocks moved higher on Wednesday with many of the names that have been hardest hit by the pandemic – such as cruise lines, airlines and retailers – rebounding, which led CNBC’s Jim Cramer to question if the rally was simply hedge funds covering short positions. “We seemed to have a big short squeeze last night … did someone blow up?” he asked Thursday. “There was no real explanation other than perhaps short covering given the beaten they’ve taken,” added CNBC’s David Faber. Norwegian Cruise Line has surged 41% this week, while Royal Caribbean Cruises and Carnival Corp are each up more than 25% on the week. For the year, however, they are all down more than 60%. Airlines were another group leading the rally, with Untied, America and Delta all up more than 12% this week. Much like the cruise lines, however, they’ve posted steep losses for the year, with all three down more than 55%. – Stevens
9:30 am: Stocks drop as jobless claims weigh
Stocks opened in the red on the final day of April trading, in what’s otherwise been an overall strong month of stocks. The Dow dropped 264 points for a loss of 1%, the S&P 500 shed 0.7%, while the Nasdaq Composite was flat. Jobless claims, which have now topped 30 million over the last six weeks, weighed on markets, as did a plunge in consumer spending and personal incomes in March. – Stevens
9:08 am: Consumer spending drops in March
U.S. consumer spending dropped 7.5% in March, compared with a year earlier, as Americans stayed home in an effort to slow the spread of the coronavirus. The slowdown in spending also came as personal incomes dropped 2% in March, according to the U.S. Bureau of Economic Analysis. – Stevens, Schoen
8:45 am: Jobless claims top 30 million over the past 6 weeks
The Labor Department reported another 3.84 million Americans filed for unemployment benefits last week, bringing the total number to more than 30 million in a six-week period. The jump in unemployment claims wiped out the job gains made since the financial crisis as businesses are forced to shut down due to the coronavirus pandemic. “Bottom line … it’s like banging your head against the wall and then having a headache,” said Peter Boockvar of Bleakley Advisory Group in a note. “We don’t need to analyze why you have a headache, only how long it lasts. The claims number will continue to come down as more people start to go back to work in coming weeks and months.” —Imbert, Cox
8:38 am: Tesla shares jump following earnings
Tesla shares gained 8% during Thursday’s premarket trading after the electric vehicle maker posted a profit for the third straight quarter. In the first quarter the company earned $1.24 per share, ex-items, on $5.99 billion in revenue. Wall Street was expecting an adjusted loss of 36 cents per share and revenue of $5.9 billion for Q1, according to a survey of analysts by Refinitiv. However, estimates varied widely and comparing Tesla’s actual results with estimates isn’t straightforward, given the difficulty of predicting the impact of the coronavirus. —Stevens, Kolodny
7:41 am: Facebook shares jump on ad revenue ‘stability’
Shares of the social media giant jumped more than 8% in the premarket after the company reported “stability” in its ad revenue after a decline in March. Facebook said its March ad revenues dropped sharply amid the coronavirus pandemic, but noted it stabilized in the first few weeks of April. The company’s overall revenues for the first quarter beat expectations. “The COVID impact, while negative, is less severe for FB (25 points of decel) than peers such as Google search, Snap or Twitter, showing strength of FB’s news feed auction,” writes BofA Securities analyst Justin Post. —Imbert
7:40 am: Oil prices jump on optimism surrounding economies reopening
Oil prices jumped on Thursday, extending Wednesday’s surge, on optimism that economies might soon begin to reopen. West Texas Intermediate crude futures climbed $2.36, or 15.7%, to $17.43 per barrel. The U.S. benchmark surged 22% on Wednesday. Brent was up 11.4%, or $2.57 at $25.11 a barrel in light trading, with the June contract expiring on Thursday, having posted a 10% gain on Wednesday. Oil also rose after data showed a smaller-than-expected build in U.S. stockpiles, as well as an announcement from Norway’s oil minister that the country would curb production for the first time in 18 years in an effort to help shore up prices. –Stevens
7:32 am: Weekly jobless claims expected to hit 3.5 million
The unprecedented swelling of the unemployment ranks continued last week, with first-time jobless claims expected to hit 3.5 million when the Labor Department releases its latest count Thursday at 8:30 a.m. ET. If that’s accurate, it would take the running six-week total close to 30 million as the economic freeze brought about by the coronavirus continues. The only bright side is that the level of filing appears to have peaked from the nearly 6.9 million who filed the week of March 28. –Cox
7:30 am: Stock futures flat, on pace for best month in decades
U.S. equity futures were mainly flat on Thursday as market participants digested strong technology earnings and awaited jobless claims. The Dow Jones Industrial Average futures implied an opening gain of around 70 points. S&P 500 and Nasdaq-100 futures also pointed to gains at the open.
Stock surged on Wednesday, with the Dow rising more than 500 points. The rally was helped by hopes of a coronavirus treatment from Gilead and commentary by the Federal Reserve that the central bank will take any measures necessary to support the economy. Equities were also helped by strength in technology stocks, like Alphabet, which jumped more than 5%. The S&P technology sector closed in positive territory for the year.
Thursday is the last trading day if April. The S&P 500 is on track for its biggest one-month gain since 1974. The Dow is on pace for its best month since 1987. — Fitzgerald
– With reporting from Patti Domm, Jeff Cox and Lora Kolodny.
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