Closing Stock Market SummaryThe stock market ended a two-day skid on Thursday, and oil prices spiked 24% on hopes for a truce to the global price war. Stocks rose even as weekly initial claims doubled to a record 6.6 million, depicting the dire economic situation caused by the coronavirus.
The S&P 500 (+2.3%) and Dow Jones Industrial Average (+2.2%) set the pace with gains over 2.0%, followed by the Nasdaq Composite (+1.7%) and Russell 2000 (+1.3%).
At one point, WTI crude was up more than 34% after President Trump said Saudi Arabia and Russia could soon cut production by about 10 million barrels per day after speaking with both nations. The president later said production cuts could even be as high as 15 million barrels per day. WTI crude futures settled higher by 23.9%, or $4.86, to $25.18/bbl.
Although more discussions are reportedly needed between Saudi Arabia, Russia, and possibly even the U.S. to reach an agreement, news that Saudi Arabia is asking for an emergency OPEC+ meeting supported the market's price-truce hopes. Conversely, some investors were wary that the lack of oil demand would still weigh on the industry despite attempts to control supply.
Nevertheless, the bounce in oil was a much-needed reprieve for companies within the S&P 500 energy sector (+9.1%), which led all sectors in gains by a wide margin. The utilities sector (+3.2%) was next in line, while the consumer discretionary sector (+0.4%) was today's laggard.
Specifying the jobs data, initial claims spiked by 3.341 million to a seasonally adjusted 6.648 million (Briefing.com consensus 2,800,000) for the week ending March 28. Continuing claims for the week ending March 21 reached 3.029 million, which is the highest level since July 6, 2013. The positive price action in the market suggested that the shocking numbers may already have been priced in.
Separately, shares of Walgreens Boots Alliance (WBA 40.32, -2.71, -6.3%) dropped 6%, as the company's cautious tone regarding its outlook outweighed its better-than-expected quarterly results. Note, the Dow component's fiscal quarter ended on Feb. 29, which was before the economic shutdowns in March.
U.S. Treasuries finished mixed and little changed. The 2-yr yield increased one basis point to 0.23%, while the 10-yr yield declined one basis point to 0.63%. The U.S. Dollar Index increased 0.5% to 100.19.
Reviewing Thursday's economic data:
- For the week ending March 28, initial claims spiked by 3,341,000 to a seasonally adjusted 6,648,000 (consensus 2,800,000). Continuing claims for the week ending March 21 spiked by 1,245,000 to 3,029,000, which is the highest level since July 6, 2013.
- The key takeaway from the report is that it speaks to how bad things are right now for so many people due to the sudden economic stop, but, unfortunately, the report itself likely still doesn't reflect the full extent of the layoff picture.
- The trade deficit narrowed to $45.3 billion (consensus -$46.0 billion) in January from an upwardly revised -$48.6 billion ( from -$48.9 bln) in December.
- The key takeaway from the report is that it featured a decline in both exports and imports; however, the understanding that this is a January report (i.e. doesn't capture the brunt of the coronavirus impact) will diminish market interest in it.
- Factory orders were unchanged m/m in February (consensus +0.3%) following an unrevised 0.5% decline in January. Shipments were down 0.2% m/m in February after decreasing 0.6% in January.
- The key takeaway from the report is that it showed business spending was relatively soft in February, which is expected to give way to an extremely sharp contraction in March.
Looking ahead, investors will receive the Employment Situation Report for March and the ISM Non-Manufacturing Index for March on Friday.
- Nasdaq Composite: -16.6%
- S&P 500: -21.8%
- Dow Jones Industrial Average: -25.0%
- Russell 2000: -34.9%