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Stocks rose Wednesday and the Dow advanced more than 300 points, or 1.2%, as hopes surrounding some states’ reopenings extended during the session.
Wall Street was poised to reverse Tuesday losses, which sent each of the Dow and S&P 500 off more than 1%. These declines came after a STAT News report late during the regular trading day questioned the significance of the data Moderna (MRNA) provided in assessing its experimental COVID-19 vaccine candidate. Tuesday’s dip in turn erased some of the gains made during a roaring session Monday, during which optimism over Moderna’s vaccine data had contributed in part to the advance.
“Investors after the initial waterfall decline have dissected and realized which stocks are going to be able to hold up better during this phase,” Ed Clissold, Ned Davis Research’s chief strategist, told Yahoo Finance on Wednesday.
He predicted a “massive rotation that you normally see at the beginning of a bull market” from the biggest names into other stocks that can outperform. “This rotation is going to happen once the economy really starts to open up,” he added.
Some more upbeat developments, however, continued to trickle in surrounding the pandemic. In the hard-hit state of New York, Governor Andrew Cuomo said in his daily briefing Wednesday that another 112 individuals lost their lives from the coronavirus as of Tuesday, with this marking the tenth straight day that the death toll came in below 200. New deaths in New York have come down significantly from the hundreds of new daily deaths recorded in early April.
Elsewhere, Ohio Governor Mike DeWine announced Tuesday afternoon that he was lifting mandatory stay in place orders and instead designating these measures as “strong recommendations,” albeit while keeping restaurants and some other businesses under stricter restrictions. Meanwhile, an earlier report from South Korean health officials suggested that individuals who tested positive for Covid-19 and recovered had a level of protection from reinfection and transmission.
But even as the health crisis appears to have eased by some measures in some areas, the economic distress induced by the crisis and social distancing measures remains on full display. New data Tuesday morning showed new U.S. housing starts and building permits fell to the lowest levels since early 2015 in April, signaling the far-reaching impact of the pandemic on activity across virtually all sectors of the economy.
And in congressional testimony Tuesday, Treasury Secretary Steven Mnuchin said there was “the risk of permanent damage” if states take too long in reopening, thereby keeping an anchor on employment and business activity. Still, his baseline assumption is that economic conditions will improve in the third and fourth quarters of this year.
His testimony came alongside remarks from Federal Reserve Chair Jerome Powell, who said before the Senate Banking Committee he expects the Fed’s Main Street Lending Program aimed at providing loans to small- and medium-sized businesses will launch by the end of the month or first few days of June.
4:05 p.m. ET: Stocks finish higher amid reopenings, stimulus hopes
Here’s where the major indices had settled as of 4:05 p.m. ET:
S&P 500 (^GSPC): +48.67 (+1.67%) to 2,971.61
Dow (^DJI): +369.04 (+1.52%) to 24,575.90
Nasdaq (^IXIC): +190.67 (+2.08%) to 9,375.78
Crude (CL=F): +$1.58 (+4.94%) to $33.54 a barrel
Gold (GC=F): +$5.80 (+0.33%) to $1,751.40 per ounce
10-year Treasury (^TNX): -3.1 bps to yield 0.6800%
2:02 p.m. ET: Federal Reserve releases April meeting minutes, revealing some participants were considering ‘more explicit’ forward guidance
The Federal Reserve released the minutes for its April 28 through April 29 policy meeting, during which the central bank decided to hold benchmark interest rates near zero. The release Wednesday afternoon did not contribute to a meaningful initial market reaction across assets.
In the minutes, the central bank revealed that “some participants commented that the Committee could make its forward guidance for the path for the federal funds rate more explicit.”
“For example, the Committee could adopt outcome-based forward guidance that would specify macroeconomic outcomes—such as a certain level of the unemployment rate or of the inflation rate—that must be achieved before the Committee would consider raising the target range for the federal funds rate,” it added.”
“The Committee could also consider date-based forward guidance that would indicate that the target range could be raised only after a specified amount of time had elapsed,” The Fed said in the minutes. “These participants noted that such explicit forms of forward guidance could help ensure that the public’s expectations regarding the future conduct of monetary policy continued to reflect the Committee’s intentions.”
1:30 p.m. ET: Apple-Google launch joint COVID testing initiative
Among public health officials, contact testing is a hot-button issue in the fight against the coronavirus pandemic, and the move to reopen states. Via Reuters, approximately 23 countries are seeking access to technology from Apple (AAPL) and Alphabet Inc's Google (GOOG), which uses mobile apps to log users who are in physical proximity for at least five minutes.
A user who later becomes infected with the virus could use the app to automatically and anonymously notify recent contacts.
12:02 p.m. ET: Stocks buoyed by reopen fever; Facebook at new high
Stocks are holding gains at midday, with hopes for more reopenings helping to buoy market sentiment. In his weekly briefing, New York Governor Andrew Cuomo announced more of the state’s regions would relax lockdown rules, and that gatherings of 10 or fewer people would be allowed.
One of the day’s biggest movers is Facebook (FB), which hit a record high and is up over 6% on the day, after news that it was rolling out a new shopping initiative to boost small businesses.
TD Ameritrade’s Shawn Cruz told Yahoo Finance that investors were expecting a “more gradual recovery,” but people are eager to get out and spend — even as retailers are seeing lower margins. However high flying FAANG (Facebook, Amazon, Apple, Netflix and Google) appear to be hitting upside resistance, he added.
10:41 a.m. ET: Crude oil inventories unexpectedly fell by 5 million barrels last week, according to EIA
U.S. crude oil inventories declined by about 5 million barrels during the week ended May 15, the Energy Information Administration said in its weekly report Wednesday morning. This brought total domestic crude oil inventories to 526.5 million barrels, or about 10% above the five-year average during this time of year.
The median estimate was for crude inventories to rise by 2.15 million barrels for the week ended May 15, according to Bloomberg data.
Front contracts for West Texas intermediate crude oil (CL=F) extended gains following the report, rising 4.2% to $33.30 per barrel as of 10:41 a.m. ET. The futures contracts were on track to settle higher for a fifth straight session as of Wednesday’s intraday trading.
9:32 a.m. ET: Stocks open higher
Here were the main moves in markets, as of 9:32 a.m. ET Wednesday:
S&P 500 (^GSPC): +36.7 points (+1.26%) to 2,959.64
Dow (^DJI): +306.3 points (+1.27%) to 23,513.16
Nasdaq (^IXIC): +131.55 points (+1.43%) to 9,317.6
Crude (CL=F): +$0.88 (+2.75%) to $32.84 a barrel
Gold (GC=F): +$6.40 (+0.37%) to $1,752.00 per ounce
10-year Treasury (^TNX): unchanged and yielding 0.711%
7:33 a.m. ET: Lowe’s stock jumps in early trading
Lowe’s (LOW) posted first-quarter sales and profit that topped consensus expectations and grew over last year.
First-quarter adjusted earnings per share were $1.77 on net sales of $19.68 billion, with each better than the $1.29 per share on sales of $18.28 billion anticipated, according to Bloomberg data. Comparable same-store sales jumped 11.2% over last year, or more than double the 3.5% growth rate in the same quarter last year and the consensus estimate for a rise of 4%.
Online sales demand also jumped, with digital revenue up 80% during the quarter, the company said.
A day earlier, competitor Home Depot had posted mixed results, with strong sales offset by weaker than expected profit, driven by an $850 million in pre-tax expenses due to coronavirus-related measures to support associates. Lowe’s also incurred additional costs related to the pandemic.
The company “made two special payments of $300 for full-time hourly associates and $150 for part-time hourly associates to help with unexpected expenses, totaling approximately $145 million,” it said in a statement.
7:23 a.m. ET: Target posts strong quarterly results amid COVID ‘uncertainty’
Target (TGT) delivered first-quarter sales and profit that topped consensus expectations, but declined to provide further details on its expected upcoming performance after initially pulling its guidance back in March.
Net sales of $19.6 billion for the quarter ended May 2 were better than the $18.75 billion expected, and adjusted earnings per share of 59 cents topped estimates by 13 cents. Closely watched comparable same store sales rose 10.8%, or better than the 7.5% rise anticipated.
Target warned in a press release earlier in April that it was seeing sales shift from higher margin categories like clothing to lower margin categories like food and groceries. Ultimately, Target posted first-quarter gross margins of 25.1%, shrinking from the 29.6% posted in the same quarter last year.
7:12 a.m. ET Wednesday: Stock futures rise
Here were the main moves in markets, as of 7:12 a.m. ET Wednesday:
S&P 500 futures (ES=F): up 33.25 points, or 1.14%, to 2,952.00
Dow futures (YM=F): up 284.00 points, or 1.18%, to 24,442.00
Nasdaq futures (NQ=F): up 100 points, or 1.08%, to 9,400.75
Crude (CL=F): +$0.19 (+0.59%) to $32.15 a barrel
Gold (GC=F): +$9.70 (+0.56%) to $1,755.30 per ounce
10-year Treasury (^TNX): -1.5 bps to yield 0.696%
7:00 a.m. ET Wednesday: Weekly mortgage applications for purchases rise for a fifth straight week
Weekly mortgage applications to purchase homes rose 6%, seasonally adjusted, for the week ended May 15 from the prior week, marking the fifth straight week that purchase applications increased, according to the Mortgage Bankers Association’s weekly report.
“Purchase activity – which was 35% below year-ago levels six weeks ago – increased across all loan types and was only 1.5% lower than last year,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.
“As states gradually reopen and both home buyer and seller activity increases, we will be closely watching to see if these positive trends continue, or if they reflect shorter-term, pent-up demand,” he added.
Still, refinance mortgage applications declined 6% the week of May 15 from the prior week. Refinance activity was at its lowest level in more than a month. Inclusive of both refinance and purchase applications, the MBA’s Market Composite Index tracking mortgage loan application volume fell 2.6% over the prior week.
6:07 p.m. ET Tuesday: Stock futures open lower
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:07 p.m. ET:
S&P 500 futures (ES=F): 2,910.25, off 8.5 points (-0.29%)
Dow futures (YM=F): 24,092.00, off 66 points (-0.27%)
Nasdaq futures (NQ=F): 9,281.75, off 19 points (-0.2%)