Dow up 400 points, volatile week

The stock market rebounded from Tuesday’s late-session sell-off as investors grew more hopeful that the U.S. economy can continue to reopen after the coronavirus-induced shutdown. Solid retail earnings from Lowe’s and Target also lifted sentiment.

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Cowen said it sees “higher growth and higher profitability” in chip market Western Digital as the company is successfully shifting costs to its storage business. “The last 2 years WDC has eliminated $800MM/year of costs, repositioned product lines toward value-maximization and made actionable investments in silicon and nearline hard drisk drive’s that collectively have improved WDC’s competitive position,” the analyst said. “We remain at Outperform on WDC as the company has now passed the bottom of the NAND cycle, which should facilitate WDC to report improving demand fundamentals over our investment horizon.” Shares of the company are up 5% in early trading.— Bloom

Mark Zuckerberg announced Tuesday Facebook Shops, a new e-commerce feature that allows businesses to easily list their products on Facebook and Instagram and Wall Street is bullish on the social media’s new initiative. “We have long viewed FB as the ‘rent’ to the digital economy and a core component of the online retail ecosystem,” AB Bernstein told clients. Bernstein said Facebook Shops could unlock a $1.3 trillion market. Morgan Stanley said Facebook’s leading reach can make Facebook a competitor to Amazon and Alphabet.

Deutsche Bank echoed this sentiment. “We see the broader deployment of more advanced eCommerce solutions meaningfully expanding the potential revenue opportunity beyond our initial estimate from a year ago that Instagram Checkout could be a $10B revenue in a bull case,” Deutsche Bank told clients. — Fitzgerald

CNBC’s Jim Cramer said on “Squawk Box” that the economic restrictions on retailers during the coronavirus crisis have caused permanent damage to smaller retailers. “Walmart is essential. Walmart’s the biggest grocer in the country. So they deserve all the greatness they have … they’re a good citizen,” Cramer said. “But at the same time, the government was, I thought, a bad actor in the sense that they let some big guys become even bigger.” — Pound

JPMorgan raised MercadoLibre‘s price target to $1000 from $800 on Wednesday morning and said the Argentine e-commerce company was benefiting from the impacts of the coronavirus. “The e-commerce segment clearly benefits from the social distancing policies adopted to fight the COVID-19 pandemics, closing non-essential retail, and should benefit from faster adoption of ecommerce in the region, currently at c. 5% of retail vs 12% for the US and 20%+ for China,” the analyst said. The stock is up 3.5% in early trading.— Bloom

Both Facebook and Amazon clinched all-time highs less than 30 minutes into the regular trading session Wednesday as each surged to its highest intraday price on record. E-commerce giant Amazon rose 1.5% to $2,489.80 per share while Facebook advanced 4.2% to $226.59 per share. Netflix, which hit an intraday record of $458.97 per share on Tuesday, traded just under that benchmark. Amazon, Facebook and Netflix are up 30.5%, 53.4% and 25.6% since March 23, the day the S&P 500 bottomed amid the springtime sell-off. — Franck

Odeon analyst Dick Bove upgraded JPMorgan Chase to buy from hold and initiated a $105.75 price target on the stock. The price target represents a 19.3% upside from Tuesday’s close of $88.67 per share. “There is an incredible amount of money around. These funds have created a number of money-making opportunities for bankers,” Bove said in a note. This makes “JPMorgan Chase an attractive investment at this time despite the probability that the company will suffer reversals in its loan portfolios. The creation of trillions of dollars will result in higher earnings for those banks that are able to capture the new funds and put them to use.” —Imbert, Bloom

Wall Street analysts continue to get bullish on the prospects of a coronavirus vaccine. Morgan Stanley raised its price target on Moderna to $90 from $37 and said it sees a “65% probability” of success. “We now assume Moderna will sell ~1.5B doses of its COVID vaccine during the pandemic period and ~150M annual doses during the endemic period,” the firm said.  A report out Tuesday from Stat News said did not provide enough data regarding the effectiveness of its potential coronavirus vaccine.  Shares of the company are down 3% in morning trading.— Bloom

Stocks opened Wednesday’s session with solid gains, continuing a volatile week for Wall Street. The Dow Jones Industrial Average climbed 315 points at the open, while the S&P 500 gained 1.2% boosted by a 3% jump in Lowe’s shares. The Nasdaq Composite rose 1.3%, sitting just 5.3% below its record high in February. — Li

President Donald Trump took a tough stance on China over the handling of the coronavirus, saying in a tweet Wednesday morning that it was the “incompetence of China” that caused “this mass Worldwide killing.” Stock futures came off their highs following the comment amid worries Trump could take a harder line with China on trade and other economic matters because of the virus. Trump had threatened to terminate the “phase one” trade deal if China fails to meet its purchase commitments. Top trade negotiators talked over the phone earlier this month and agreed to follow through their trade obligations. –Li

Luckin Coffee‘s stock plunged 38% in premarket trading after it began trading for the first time in more than a month.Trading of the Chinese coffee chain’s stock on the Nasdaq exchange was halted for pending news on April 7, just days after the company disclosed that its chief operating officer fabricated its 2019 sales. There is no time limit for how long a stock can be halted for pending news.On Tuesday, Luckin said that it had received a notice from the Nasdaq that the stock would be delisted. The company has requested a hearing, and the stock will remain listed on the exchange until a Nasdaq panel decides on an outcome. —Lucas

Two stocks bucked the trend of dividend cut last night and raised their quarterly payouts to investors. Defense contractor Northrop Grumman declared a quarterly dividend of $1.45 per share, up 10% from the previous quarter. The company’s shares were flat in premarket trading. Clorox raised its quarterly dividend to $1.11 per share from $1.06, and its stock rose 1.4% in premarket trading on light volume. —Pound

Oil moved higher on Wednesday as growing demand continues to support prices. West Texas Intermediate, the U.S. benchmark, rose 1.9% to $32.58 per barrel, while international benchmark Brent crude traded 2.3% higher at $35.46 per barrel. With worldwide economies reopening, people are once again hitting the road. Producers have also cut back on output, so while there’s still an imbalance in the market, the balance is beginning to shift. Traders are looking ahead to data released by the U.S. Energy Information Administration later this morning for a read on the health of the industry. Analysts are expecting the data to show a build of 1.8 million barrels for the week ending May 15, according to estimates from FactSet. —Stevens

Mark Newton, managing member at Newton Advisors, told clients that further market gains are still likely even after a sudden drop late Tuesday. “The late day weakness did nothing to take away from the bullish structure that resulted from Monday’s breakout,” Newton said. “We look to be at a juncture where the worst performing laggards of this year have begun a sharp counter-trend rally and can play catchup. I expect this to last into late week/early next.” Newton added that, unless the S&P 500 breaks down to 2,860, “this dip should be buyable for a push to 3020-30.” The S&P 500 closed at 2,922.94 on Tuesday. —Imbert

The Treasury is bringing back 20-year bonds, last issued in 1986, in a bid to extend the length of time it has to pay off its record level of borrowing to support the economy through the coronavirus pandemic. A $20 billion auction will be held at 1 p.m. ET on Wednesday. Analysts expect the new issue to be met with good demand as the 20-year note is particularly appealing to foreign investors, pension funds and insurers, who look for longer duration holdings to match their liabilities. –Li, Domm

Investors will learn more about the mindset of the Federal Reserve when minutes are released from the central bank’s last meeting. The Federal Open Market Committee held its benchmark borrowing rate near zero following a meeting that ended April 29. In addition, the FOMC pledged to keep policy steady “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” Markets had been looking for a bit firmer of a commitment to when the Fed would consider tightening policy again. The meeting summary will come out at 2 p.m. ET. –Cox

Shares of Target gained about 1% during Wednesday’s premarket trading after the company’s first quarter earnings results showed that digital sales jumped 141% year-over-year. Overall, Target’s same-store sales grew by 10.8% as people shopped at the big box retailer amid the pandemic. But sales of higher-margin items, such as apparel, dropped, hitting the company’s bottom line. For the quarter the big-box retailer earned 56 cents per share, down from $1.53 a year earlier, while revenue rose 11.3% to $19.62 billion. CEO Brian Cornell said that coronavirus-related expenses, such as higher wages, has risen to about $500 million.  —Stevens

Shares of home improvement retailer Lowe’s jumped more than 5% in premarket trading after the company said its first-quarter same-store sales surged 11.2% even amid the Covid-19 outbreak. For the company’s first quarter, ended May 1, Lowe’s reported net income rose to $1.34 billion compared to earnings of $1.05 billion one year ago. CEO Marvin Ellison said he was pleased with strong online demand, with Lowes.com sales increasing 80% during the quarter. —Franck

U.S. stock futures were sharply higher on Wednesday morning as the market’s volatility this week keeps investors on their toes. Dow Jones Industrial Average futures were up 253 points, or 1.1%. S&P 500 and Nasdaq 100 futures both gained 1%. Wednesday’s move up comes after a sharp decline in the previous session that snapped a three-day winning streak. Sentiment was lifted Wednesday in part by strong earnings from Lowe’s. —Imbert 

—With reporting from Maggie Fitzgerald, Jeff Cox, Yun Li, Jesse Pound, Patti Domm, Michael Bloom and Amelia Lucas. 

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