U.S. equities started the week off with declines on Monday amid falling oil prices and abounding uncertainty about the depth or duration of the coronavirus pandemic. All three major averages fell more than 1%. U.S. oil prices fell as much as 41% as the May contract was set to expire on Tuesday. Earnings season was set to continue as investors braced for more bad data about the virus’s impact on corporate profits. Here’s whats happening.
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11:16 am: Stay-at-home stocks leading equities from lows
Stocks benefiting from the stay-at-home trend gained on Monday, helping keep the major averages off their lows. Amazon’s stock rose more than 2% as the e-commerce giant continues to take advantage of Americans’ stocking up on food and household items. Streaming giant Netflix is a winner of the coronavirus shutdown with consumer increasing screen time. Netflix’s stock rose nearly 5%, making its year-to-date gain nearly 40%. Social media stock Facebook rose about 0.5% and AMD rose 3.5%. AMD, which makes chips for video games, is benefiting from the quarantine as more people spend time at home gaming. — Fitzgerald
11:07 am: Stocks pare losses
Stocks cut their losses around 11:00 am ET, with the Dow Jones Industrial Average down about 200 points. The S&P 500 fell 0.5% and the Nasdaq Composite was in the green. — Fitzgerald
10:50 am: Market rally from March lows feels like 2009, strategist says
The S&P 500 has surged more than 25% since hitting a low on March 23. That bounce, according to The Earnings Scout CEO Nick Raich, feels like 2009. “How so? The worst of the S&P 500 downward EPS estimates, in terms of the magnitude of the cuts, occurred in early 2009. When the worst of the cuts were over, stock prices bottomed in March of 2009,” Raich said in a note to clients. To be sure, there is one key difference between then and now, Raich said: “Stock prices became extraordinarily cheap in 2009. They are not in 2020.” —Imbert
10:34 am: Cramer says Friday’s closing rally was ‘phony’
CNBC’s Jim Cramer said on “Squawk on the Street” that the final hour rally on Friday was “phony” and gave investors and analysts a chance to back away from stocks. “Friday’s market was a phony market, okay? There was 300 points added in the last few minutes,” Cramer said. The Dow rose 705 points, or 2.99%, on Friday, with much of that gain coming in a rally in the final hour of trading.— Pound
10:31 am: Walmart hits new 52-week high
Walmart’s stock hit a 52-week high of $133.38 per share on Monday. Walmart’s stock is up 10% this year as the big box retailer benefits from the stay-at-home trend and an increase in online grocery orders. Walmart’s stock rose slighlly in morning trading on Monday. —Fitzgerald
10:08 am: Analysts downgrade some key stocks, including Disney and Peloton, as the rebound may have gone too far
- BMO downgraded Peloton to underperform from market perform.
- Citi downgraded Boeing to neutral from buy.
- JPMorgan upgraded DuPont to overweight from equal weight.
- UBS downgraded Disney to neutral from buy.
- Wells Fargo downgraded Gilead to equal weight from overweight.
- Credit Suisse downgraded Disney to neutral from outperform.
- RBC upgraded AbbVie to outperform from sector perform.
- BMO upgraded Under Armour to market perform from underperform.
- Argus upgraded Citi to buy from hold.
- Stephens downgraded Redfin to equal weight from overweight.
- Oppenheimer initiated MSG Entertainment as outperform. —Bloom
10:01 am: Energy stocks under pressure
The Energy Sector SPDR ETF dropped 4.5% in morning trading, on pace for its sixth negative day in seven. The ETF has fallen 46% this year with oil prices under pressure amid disappearing demand. Monday’s decline was led by Occidental Petroleum, which fell more than 9%. Helmerich & Payne, National Oilwell and Schlumberger all lost about 6%. The weakness in energy companies came as the price of West Texas oil cratered in part due to the May futures contract nearing expiration. – Li, Francolla
9:50 am: Netflix and Amazon on the rise again
Shares of Amazon and Netflix climbed 2.1% and 3.4%, respectively, once again outperforming the broad market and pushing their 2020 gains to more than 30% each. The tech duo, which both hit record highs last week, are in a position to benefit from the stay-at-home trend amid the coronavirus outbreak. They are also among the firsts to fully make back the deep losses from the pandemic sell-off. — Li
9:45 am: If oil falls below this price, look out below
Market technicians are watching the plummeting West Texas Intermediate May futures contract to see if it breaks $9.75 per barrel. That’s a low price it’s been at twice before – in 1998 and 1986. So if it skids below that level it would be a record low in the futures market. WTI was down more than 37% at about $11.50 per barrel in midmorning trading. The May contract expires Tuesday, and it is plunging because nobody wants to take delivery of the physical commodity in a market with no place to store it. The world wide oil glut has made storage scarce. Traders said in places like western Canada and Wyoming oil is selling for negative prices this morning. —Domm
9:32 am: Stocks open with sharp declines, Dow down 450 points
U.S. equities opened deep in the red on Monday with the Dow Jones Industrial Average falling 480 points. The S&P 500 fell 1.5% and the Nasdaq Composite dropped 1% as markets digested the economic fallout of the coronavirus crisis. Oil’s spiral continued to weigh on stocks. —Fitzgerald
9:16 am: United Airlines posts $2.1 billion loss on coronavirus hit, seeks more federal aid
United Airlines on Monday reported a $2.1 billion loss for first quarter as the coronavirus pandemic drove travel demand down to the lowest level in decades. The Chicago-based airline said it has applied for up to $4.5 billion in government loans on top of about $5 billion federal payroll grants and loans it also expects to receive to weather the crisis.
United is the first major U.S. airline to detail the results — while they are preliminary — of the virus on its first quarter results. The disease and harsh measures to stop it from spreading such as stay-at-home orders has ravaged air travel demand and and prompted carriers to slash most of their flights. United said revenue fell 17% in the first quarter from a year ago to $8 billion. On an adjusted basis, United said it had a roughly $1 billion loss in the quarter. Shares of United Airlines fell more than 5% in premarket trading. — Josephs
9:07 am: Disney hit with two downgrades
Credit Suisse and UBS both downgraded Disney to neutral as the company’s theme parks are remain closed due to the coronavirus crisis. UBS said the parks are unlikely to reopen this year and that business will be slower when they do. The entertainment stock fell about 3% in premarket trading and has underperformed the broader market so far this year. — Pound
8:40 am: Energy stocks down big following oil’s collapse
Shares of oil producers and services companies are dropping in premarket trading on Monday after oil prices tumbled to their lowest level in more than 21 years. The May contract of U.S. West Texas Intermediate (WTI) futures fell to $11.04 a barrel on Monday, down almost 40%, to register its lowest level since Dec. 22, 1998. Devon Energy and Noble Energy both fell more than 8%, while Occidental Petroleum tanked 10%. Halliburton dropped more than 7% after the oilfield services company warned of a big drop in activity due to oversupply and a massive drop in oil demand. – Li
8:12 am: Senate nears $370 billion deal for coronavirus small business loan programs
Senate Democrats and Republicans are nearing a deal that could inject roughly $370 billion into loan programs for small businesses, a person familiar with the negotiations told CNBC. The talks come after the $349 billion Paycheck Protection Program, which offers forgivable loans to small businesses, ran out of money on Thursday. Democrats rejected a proposal to refill the fund two weeks ago. They instead argued for changes, including adding more money to support federal testing, hospitals and local governments. They’ve also pushed to ensure groups without banking relationships get access to the program and SNAP benefits. — Hirsch
7:59 am: Shake Shack returns small business loan
The burger chain’s CEO said Monday that Shack Shack is returning the $10 million small business loan it received from the government. The restaurant chain was able to raise about $150 million in an equity offering last week. The SBA loan program was a part of the federal government’s $2.2 trillion rescue package to help small and medium sized businesses and their employees during the coronavirus shutdown. Shares of Shake Shack ticked about 1.2% lower in premarket trading on Monday. — Fitzgerald
7:50 am: Oil drops to more than 20 year low as pandemic ravages demand
Oil prices dropped to their lowest level in more than 20 years on Monday as the coronavirus continues to eat away at demand, and as traders fear that with tanks filling up rapidly, there will soon be nowhere to store crude. The price of the nearest futures contract for West Texas Intermediate, which expires Tuesday, plunged 26% to $13.39 per barrel. The contract for June delivery, which expires on May 19, fell more than 8% to $22.91 per barrel, while the July contract was roughly 5% lower at $28. Brent crude, the international benchmark, traded 3.38% lower at $27.12 per barrel.
The front part of the futures ‘curve,’ or the contract that expires tomorrow, was hit the hardest since it applies to fuel that’s set to be delivered while most of the country remains on lockdown due to the pandemic. There’s little demand for gasoline from refineries, and storage tanks in the U.S. are nearing their limits.
“A trading squeeze ahead of the futures contract expiry is exacerbated by the dislocation in the fundamentals this time around, contributing to these large price swings,” Rystad Energy’s head of oil markets Bjornar Tonhaugen said to CNBC in an email. – Stevens
7:45 am: Coronavirus updates: New York past its peak, US deaths surpass 40,000
New York Gov. Andrew Cuomo said Sunday the state is “past the high point” of new cases, noting the infection rate has fallen along with coronavirus-related hospitalizations. The governor said that 507 people died of the virus in New York on Sunday, down from 540 deaths reported on Saturday, which marks the state’s lowest daily death toll in over two weeks. Still, 1,300 people were hospitalized on Saturday Cuomo said. At least 13,869 people have died in New York from the virus.
Despite optimistic news from the virus’s epicenter, deaths from the COVID-19 in the U.S. topped 40,000 on Sunday, according to data from Johns Hopkins. The deadly virus has infected more than 759,000 Americans. Globally, the coronavirus has infected 2.4 million people and killed more than 165,000 people. – Fitzgerald
7:30 am: Dow futures fall 500 points
Stock futures pointed to the declines at the open on Monday, with Dow futures falling more than 500 points. The S&P 500 and Nasdaq were also set to drop at the opening bell. Markets are digesting the latest coronavirus news as well as a 20% decline in U.S. oil prices. Earnings season continues on Monday as investors await data on how badly the COVID-19 outbreak has dented corporate profits. IBM reports after the bell.
Stocks are coming off of their second week of gains in more than two months. U.S. equities got a boost last week when the White House discussed reopening the economy and Gilead Sciences appeared to have an effective coronavirus treatment. — Fitzgerald
— with reporting from CNBC’s Lauren Hirsh, Pippa Stevens, Michael Bloom, Gina Francolla, Patti Domm and Leslie Josephs.
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