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U.S. Stocks Have Their Best Month Since 1987: Live Updates U.S. Stocks Have Their Best Month Since 1987: Live Updates
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Stocks fell on Thursday, giving up some of their gains from the day before, after reports that showed millions more Americans applied for weekly unemployment benefits and consumer spending collapsed.Stocks fell on Thursday, giving up some of their gains from the day before, after reports that showed millions more Americans applied for weekly unemployment benefits and consumer spending collapsed.
The S&P 500 closed down nearly 1 percent, but it was a small retreat in an otherwise strong month for Wall Street. Even with the decline on Thursday factored in, the S&P 500 had its best month since January 1987, a gain that came even as it became increasingly clear that the coronavirus crisis was pushing the United States into a dire economic downturn.The S&P 500 closed down nearly 1 percent, but it was a small retreat in an otherwise strong month for Wall Street. Even with the decline on Thursday factored in, the S&P 500 had its best month since January 1987, a gain that came even as it became increasingly clear that the coronavirus crisis was pushing the United States into a dire economic downturn.
The nearly 13 percent gain this month means the S&P 500 is now up roughly 30 percent from its March 23 low. It’s a rally that has surprised even the most ardent bulls.The nearly 13 percent gain this month means the S&P 500 is now up roughly 30 percent from its March 23 low. It’s a rally that has surprised even the most ardent bulls.
“Frankly, I’m shocked by the speed of the rally,” said Julian Emanuel, chief equity and derivatives strategist at the brokerage firm BTIG, who has been expecting a rebound since before the rally began.“Frankly, I’m shocked by the speed of the rally,” said Julian Emanuel, chief equity and derivatives strategist at the brokerage firm BTIG, who has been expecting a rebound since before the rally began.
The rally, even in the face of crushing economic data, highlights investors’ confidence that things will return to normal sooner than they thought when stocks were collapsing in late February and early March.The rally, even in the face of crushing economic data, highlights investors’ confidence that things will return to normal sooner than they thought when stocks were collapsing in late February and early March.
Both the Federal government and the central bank have pumped trillions of dollars into the economy and financial markets, lockdown measures appear to be having some success in reducing rates of infection, and some states are laying out the conditions for reopening.Both the Federal government and the central bank have pumped trillions of dollars into the economy and financial markets, lockdown measures appear to be having some success in reducing rates of infection, and some states are laying out the conditions for reopening.
“Instead of now talking about shutting everything down, we’re talking about opening it back up again,” said Scott Clemons, chief investment strategist for private banking at Brown Brothers Harriman. “That’s a good change in the conversation.”“Instead of now talking about shutting everything down, we’re talking about opening it back up again,” said Scott Clemons, chief investment strategist for private banking at Brown Brothers Harriman. “That’s a good change in the conversation.”
Some states in the South have begun trying to return to normal, and bigger states such as New York and California have started laying out the conditions for reopening. Some states in the South have begun trying to return to normal, and bigger states such as New York and California have started laying out the conditions for reopening.
That does not mean the economy is suddenly going to be back on track.That does not mean the economy is suddenly going to be back on track.
Markets tend to rebound long before any actual improvement in economic fundamentals is apparent, as investors buy shares based on expectations for what will happen later in the year, rather than the current climate. During the last recession, the stock market bottomed in March 2009. But the unemployment rate didn’t begin to drop until October of that year.Markets tend to rebound long before any actual improvement in economic fundamentals is apparent, as investors buy shares based on expectations for what will happen later in the year, rather than the current climate. During the last recession, the stock market bottomed in March 2009. But the unemployment rate didn’t begin to drop until October of that year.
Top Wall Street economists expect the second-quarter economic data to look, well, cataclysmic. J.P. Morgan economists, for example, believe the American economy will shrink at a previously unthinkable 40 percent annual rate in the second quarter. The Congressional Budget Office thinks unemployment could hit 16 percent by the third quarter.Top Wall Street economists expect the second-quarter economic data to look, well, cataclysmic. J.P. Morgan economists, for example, believe the American economy will shrink at a previously unthinkable 40 percent annual rate in the second quarter. The Congressional Budget Office thinks unemployment could hit 16 percent by the third quarter.
It’s also important to recognize that the current rally has been relatively narrow, with an outsize part of the gains for the S&P 500 index attributable to a handful of giant technology companies — Microsoft, Apple, Amazon, Alphabet and Facebook. In April, these companies grew to account for roughly 20 percent of the total value of the S&P.It’s also important to recognize that the current rally has been relatively narrow, with an outsize part of the gains for the S&P 500 index attributable to a handful of giant technology companies — Microsoft, Apple, Amazon, Alphabet and Facebook. In April, these companies grew to account for roughly 20 percent of the total value of the S&P.
The rebound in shares of technology companies — in part because their businesses are seen as benefiting in various ways from stay-at-home orders — has been most evident in the Nasdaq composite, which has nearly erased all of its losses for 2020. The rebound in shares of technology companies — in part because their businesses are seen as benefiting in various ways from stay-at-home orders — has been most evident in the Nasdaq composite, which has nearly erased all of its losses for 2020.
With most of the nation on lockdown, technology companies like Amazon and Apple benefited as consumers found other ways to spend their money.With most of the nation on lockdown, technology companies like Amazon and Apple benefited as consumers found other ways to spend their money.
Apple said on Thursday that its revenue grew by nearly 1 percent in the first three months of the year as the company was able to make up for sales declines in China, which was locked down for much of the quarter because of the coronavirus.Apple said on Thursday that its revenue grew by nearly 1 percent in the first three months of the year as the company was able to make up for sales declines in China, which was locked down for much of the quarter because of the coronavirus.
The company’s income was bolstered by surging sales of its internet services and the Apple Watch and AirPods.The company’s income was bolstered by surging sales of its internet services and the Apple Watch and AirPods.
Apple typically forecasts its sales for the next quarter but declined to do so on Thursday. Analysts expect the current quarter to be much uglier because of virus-related shutdowns around the world.Apple typically forecasts its sales for the next quarter but declined to do so on Thursday. Analysts expect the current quarter to be much uglier because of virus-related shutdowns around the world.
Apple showed confidence in its financial footing though by announcing another $50 billion in stock buybacks.Apple showed confidence in its financial footing though by announcing another $50 billion in stock buybacks.
The spread of the coronavirus played right into the hands of Amazon’s core businesses, as consumers shopped more online and companies spent more on cloud computing. Those two pillars of Amazon’s business drove sales to highest on record outside of the holiday shopping season, the company said on Thursday.The spread of the coronavirus played right into the hands of Amazon’s core businesses, as consumers shopped more online and companies spent more on cloud computing. Those two pillars of Amazon’s business drove sales to highest on record outside of the holiday shopping season, the company said on Thursday.
Amazon reported that it had $75.5 billion in sales in the latest quarter, up 26 percent from a year earlier, surpassing analyst expectations. Profit fell about 29 percent, to $2.5 billion, because it cost more to meet the increased customer demand.Amazon reported that it had $75.5 billion in sales in the latest quarter, up 26 percent from a year earlier, surpassing analyst expectations. Profit fell about 29 percent, to $2.5 billion, because it cost more to meet the increased customer demand.
Amazon’s chief executive, Jeff Bezos, signaled that profit may continue to fall in the near future. The company would typically expect to make around $4 billion in operating profit in the next quarter, but “we expect to spend the entirety of that $4 billion, and perhaps a bit more, on Covid-related expenses getting products to customers and keeping employees safe,” he said in a statement.Amazon’s chief executive, Jeff Bezos, signaled that profit may continue to fall in the near future. The company would typically expect to make around $4 billion in operating profit in the next quarter, but “we expect to spend the entirety of that $4 billion, and perhaps a bit more, on Covid-related expenses getting products to customers and keeping employees safe,” he said in a statement.
Macy’s, one of the biggest department store chains in the United States, announced an ambitious plan on Thursday to reopen all of its 775 locations, including Bloomingdales and Bluemercury, in the next six to eight weeks, the latest sign of how eager the nation’s largest retailers are to return to business.Macy’s, one of the biggest department store chains in the United States, announced an ambitious plan on Thursday to reopen all of its 775 locations, including Bloomingdales and Bluemercury, in the next six to eight weeks, the latest sign of how eager the nation’s largest retailers are to return to business.
The reopening plan will start on Monday with 68 stores in Georgia, Oklahoma, South Carolina, Tennessee and Texas. Macy’s will reopen another 50 locations on May 11. Macy’s temporarily closed its stores on March 18 because of the coronavirus pandemic, causing the majority of its sales to disappear.The reopening plan will start on Monday with 68 stores in Georgia, Oklahoma, South Carolina, Tennessee and Texas. Macy’s will reopen another 50 locations on May 11. Macy’s temporarily closed its stores on March 18 because of the coronavirus pandemic, causing the majority of its sales to disappear.
Macy’s expects that its reopened stores will only bring in about 15 to 20 percent of their typical business at first and “slowly build” from there, the company’s chief executive, Jeff Gennette, said during a presentation. He acknowledged that it was an open question as to whether shoppers would return.Macy’s expects that its reopened stores will only bring in about 15 to 20 percent of their typical business at first and “slowly build” from there, the company’s chief executive, Jeff Gennette, said during a presentation. He acknowledged that it was an open question as to whether shoppers would return.
In an online presentation, Macy’s said that its stores must meet certain requirements to reopen. The stores must be “financially attractive” and have “minimum viable staffing.” They must also meet certain health and safety standards, including staff training on new health and safety routines, as well as enough sanitation supplies and sneeze guards installed.In an online presentation, Macy’s said that its stores must meet certain requirements to reopen. The stores must be “financially attractive” and have “minimum viable staffing.” They must also meet certain health and safety standards, including staff training on new health and safety routines, as well as enough sanitation supplies and sneeze guards installed.
Consumer spending collapsed in March as the coronavirus pandemic put millions of Americans out of work and forced tens of millions more to stay home instead of going out and spending.Consumer spending collapsed in March as the coronavirus pandemic put millions of Americans out of work and forced tens of millions more to stay home instead of going out and spending.
Spending fell 7.5 percent from February, by far the biggest drop in the six decades that records have been kept, the Commerce Department said Thursday. The biggest previous decline was 2.1 percent in 1987. (Adjusted for inflation, spending fell 7.3 percent, also a record.)Spending fell 7.5 percent from February, by far the biggest drop in the six decades that records have been kept, the Commerce Department said Thursday. The biggest previous decline was 2.1 percent in 1987. (Adjusted for inflation, spending fell 7.3 percent, also a record.)
Figures for April could be even worse. Layoffs and business closures did not hit until late March in many places, whereas nearly the whole country has been under some form of lockdown for most of April. Many forecasters think spending could fall at an annualized rate of 40 percent or more in the second quarter, even if some businesses begin to reopen in May and June.Figures for April could be even worse. Layoffs and business closures did not hit until late March in many places, whereas nearly the whole country has been under some form of lockdown for most of April. Many forecasters think spending could fall at an annualized rate of 40 percent or more in the second quarter, even if some businesses begin to reopen in May and June.
With consumer activity responsible for more than two-thirds of the country’s economic performance, that would probably lead to the worst drop in economic output since World War II.With consumer activity responsible for more than two-thirds of the country’s economic performance, that would probably lead to the worst drop in economic output since World War II.
Incomes, too, fell in March, though not as sharply as spending. Overall personal income declined by 2 percent. Wage and salary income fell by 3.1 percent as layoffs and cuts in hours rippled through the economy. Business owners fared even worse; so-called proprietor’s income, derived from partnerships and other mostly small businesses, fell by 8.2 percent.Incomes, too, fell in March, though not as sharply as spending. Overall personal income declined by 2 percent. Wage and salary income fell by 3.1 percent as layoffs and cuts in hours rippled through the economy. Business owners fared even worse; so-called proprietor’s income, derived from partnerships and other mostly small businesses, fell by 8.2 percent.
Still, the slightly milder decline in incomes could be a silver lining for the economy: Americans are saving more. “At least households have the means to boost consumption a little when the lockdowns ease,” economists at Capital Economics wrote in a note to clients.Still, the slightly milder decline in incomes could be a silver lining for the economy: Americans are saving more. “At least households have the means to boost consumption a little when the lockdowns ease,” economists at Capital Economics wrote in a note to clients.
The American economy continues to stagger under the weight of the coronavirus pandemic, with another 3.8 million workers filing for unemployment benefits last week.The American economy continues to stagger under the weight of the coronavirus pandemic, with another 3.8 million workers filing for unemployment benefits last week.
The figures announced Thursday by the Labor Department bring the number of workers joining the official jobless ranks in the last six weeks to more than 30 million, and underscore just how dire economic conditions remain.The figures announced Thursday by the Labor Department bring the number of workers joining the official jobless ranks in the last six weeks to more than 30 million, and underscore just how dire economic conditions remain.
Many state agencies still find themselves overwhelmed by the flood of claims, leaving perhaps millions with dwindling resources to pay the rent or put food on the table.Many state agencies still find themselves overwhelmed by the flood of claims, leaving perhaps millions with dwindling resources to pay the rent or put food on the table.
If anything, according to many economists, the job losses may be far worse than government figures indicate. A study by the Economic Policy Institute found that roughly 50 percent more people than counted as filing claims in a recent four-week period may have qualified for benefits but were stymied in applying or did not even try because they found the process too formidable.If anything, according to many economists, the job losses may be far worse than government figures indicate. A study by the Economic Policy Institute found that roughly 50 percent more people than counted as filing claims in a recent four-week period may have qualified for benefits but were stymied in applying or did not even try because they found the process too formidable.
“The problem is even bigger than the data suggest,” said Elise Gould, a senior economist with the institute, a left-leaning research group. “We’re undercounting the economic pain.”“The problem is even bigger than the data suggest,” said Elise Gould, a senior economist with the institute, a left-leaning research group. “We’re undercounting the economic pain.”
The Federal Reserve on Thursday said it planned to expand its effort to lend directly to midsize businesses through its Main Street Lending Program.The Federal Reserve on Thursday said it planned to expand its effort to lend directly to midsize businesses through its Main Street Lending Program.
The program, which the Fed first announced on March 23, is part of the central bank’s broader push to keep credit flowing into the economy. The Fed has yet to give a start date for the program.The program, which the Fed first announced on March 23, is part of the central bank’s broader push to keep credit flowing into the economy. The Fed has yet to give a start date for the program.
Fed officials had previously provided an outline of how the Main Street program might work, but went back to the drawing board after receiving more than 2,200 comments from banks, businesses and individuals recommending tweaks. Now, the Fed will make loans as small as $500,000 — down from a minimum of $1 million previously — and expand eligibility requirements so that bigger companies can qualify.Fed officials had previously provided an outline of how the Main Street program might work, but went back to the drawing board after receiving more than 2,200 comments from banks, businesses and individuals recommending tweaks. Now, the Fed will make loans as small as $500,000 — down from a minimum of $1 million previously — and expand eligibility requirements so that bigger companies can qualify.
The revision also creates a new program category that will allow riskier companies to gain access to the Fed-supported loans.The revision also creates a new program category that will allow riskier companies to gain access to the Fed-supported loans.
The changes could allow oil companies with considerable debt to use the program, and in some cases will enable the businesses to use money to pay off loans preceded by the pandemic.The changes could allow oil companies with considerable debt to use the program, and in some cases will enable the businesses to use money to pay off loans preceded by the pandemic.
The maximum size for one type of Main Street loan will total $200 million, enough to benefit hundreds of small producers and oil service companies.The maximum size for one type of Main Street loan will total $200 million, enough to benefit hundreds of small producers and oil service companies.
Those changes were pushed for by oil state Republican members of Congress, and sharply criticized by environmental groups.Those changes were pushed for by oil state Republican members of Congress, and sharply criticized by environmental groups.
“It will be meaningful because the shale play companies are unable to obtain bank financing and likely unable to refinance bonds,” said Edward Hirs, a finance professor at the University of Houston. “Equity financings have been closed for a while.”“It will be meaningful because the shale play companies are unable to obtain bank financing and likely unable to refinance bonds,” said Edward Hirs, a finance professor at the University of Houston. “Equity financings have been closed for a while.”
Also on Thursday, the Fed announced it would expand its program that helps financial institutions to make forgivable small-business loans.Also on Thursday, the Fed announced it would expand its program that helps financial institutions to make forgivable small-business loans.
Firms that do not take customer deposits — including some small-business lending companies — will now be able to access the Fed’s Paycheck Protection Program, which essentially buys loans made as part of the government’s program.Firms that do not take customer deposits — including some small-business lending companies — will now be able to access the Fed’s Paycheck Protection Program, which essentially buys loans made as part of the government’s program.
The idea is to free up space on bank and credit union balance sheets, which in turn makes lending through the program more attractive. Eligible companies that buy paycheck protection loans from the original lender will in some cases be allowed to hand off the loans to the Fed.The idea is to free up space on bank and credit union balance sheets, which in turn makes lending through the program more attractive. Eligible companies that buy paycheck protection loans from the original lender will in some cases be allowed to hand off the loans to the Fed.
American Airlines reported a loss of $2.2 billion in the first quarter of the year, a damaging but expected blow in an industry rocked by the pandemic. The company ended the quarter with $6.8 billion in cash on hand and planned to increase that to $11 billion by the end of June, a recognition that the downturn will be prolonged.American Airlines reported a loss of $2.2 billion in the first quarter of the year, a damaging but expected blow in an industry rocked by the pandemic. The company ended the quarter with $6.8 billion in cash on hand and planned to increase that to $11 billion by the end of June, a recognition that the downturn will be prolonged.
“Never before has our airline, or our industry, faced such a significant challenge,” the company’s chief executive, Doug Parker, said in a statement.“Never before has our airline, or our industry, faced such a significant challenge,” the company’s chief executive, Doug Parker, said in a statement.
Here are the other big companies that reported earnings on Thursday:Here are the other big companies that reported earnings on Thursday:
Twitter said it had an unprofitable quarter for the first time in more than two years, even as more users rushed to the platform. The company lost $8.3 million in the first quarter, breaking a profitability streak that started at the end of 2017. Advertising revenue dropped by 27 percent from March 11 to March 31.Twitter said it had an unprofitable quarter for the first time in more than two years, even as more users rushed to the platform. The company lost $8.3 million in the first quarter, breaking a profitability streak that started at the end of 2017. Advertising revenue dropped by 27 percent from March 11 to March 31.
ConocoPhillips said it was cutting production by 35 percent after posting $1.7 billion loss in the first quarter. The company, the largest independent producer of oil and natural gas in the United States, generated $1.6 billion in cash from its operations in the quarter and was in better financial shape than other oil companies.ConocoPhillips said it was cutting production by 35 percent after posting $1.7 billion loss in the first quarter. The company, the largest independent producer of oil and natural gas in the United States, generated $1.6 billion in cash from its operations in the quarter and was in better financial shape than other oil companies.
Comcast saw its biggest jump in broadband subscribers and now has nearly 27 million internet customers. But it also saw one of its biggest declines in video, with more than 388,000 people cutting their TV subscriptions. Advertising, which includes its NBCUniversal division, dropped more than 2 percent, and its theme parks business plummeted 27 percent.Comcast saw its biggest jump in broadband subscribers and now has nearly 27 million internet customers. But it also saw one of its biggest declines in video, with more than 388,000 people cutting their TV subscriptions. Advertising, which includes its NBCUniversal division, dropped more than 2 percent, and its theme parks business plummeted 27 percent.
Kraft Heinz, which has struggled in recent years as consumers steered clear of its packaged foods, reported on Thursday that first-quarter sales surged 3.3 percent to $6.2 billion as shoppers stocked up on Kraft Macaroni & Cheese, Heinz ketchup and Planters nuts.Kraft Heinz, which has struggled in recent years as consumers steered clear of its packaged foods, reported on Thursday that first-quarter sales surged 3.3 percent to $6.2 billion as shoppers stocked up on Kraft Macaroni & Cheese, Heinz ketchup and Planters nuts.
The maker of Lysol, Reckitt Benckiser, reported a surge in sales for the first quarter of 2020. Revenue was up 13 percent over the period a year earlier. The company also said it saw strong demand for its Mucinex and Norofen cold and pain relief medicines.The maker of Lysol, Reckitt Benckiser, reported a surge in sales for the first quarter of 2020. Revenue was up 13 percent over the period a year earlier. The company also said it saw strong demand for its Mucinex and Norofen cold and pain relief medicines.
Dunkin’ Brands, one of the world’s largest fast-food restaurant companies, reported that sales plunged 19 percent at Dunkin’ Donuts and 23 percent at Baskin-Robbins in the last three weeks of March.Dunkin’ Brands, one of the world’s largest fast-food restaurant companies, reported that sales plunged 19 percent at Dunkin’ Donuts and 23 percent at Baskin-Robbins in the last three weeks of March.
Royal Dutch Shell, Europe’s largest oil company, said on Thursday that it would cut its dividend for the first time since World War II as the company reported a loss of $24 million for the quarter compared with $6 billion in profit in the period a year earlier.Royal Dutch Shell, Europe’s largest oil company, said on Thursday that it would cut its dividend for the first time since World War II as the company reported a loss of $24 million for the quarter compared with $6 billion in profit in the period a year earlier.
A California citrus grower returned its federal stimulus loan on Thursday, adding to the more than 25 public and private companies that have given back their funds amid public outcry. United Airlines reported a net loss of $1.7 billion in the first quarter and said it had about $9.6 billion in cash on hand to weather the crisis. The airline expects to burn through cash in the second quarter at an average daily rate of $40 to $45 million, on par with its peers.
Limoneira Company, an agribusiness that grows lemons, citrus, avocado and other produce, said in a securities filing that it would give back the $3.61 million loan it received from City National Bank. The flood of returns from firms that have received forgivable Paycheck Protection Loans comes after the federal government said it did not believe that large public companies with access to other capital should take the money. Tapestry, the company that owns the brands Coach and Kate Spade, said it would open about 40 of its stores in North America on Friday for “contactless curbside or storefront pickup.”
Reporting was contributed by Jack Nicas, Clifford Krauss, Jack Ewing, Stanley Reed, Kate Conger, Ben Dooley, Nelson D. Schwartz, Alexandra Stevenson, Sapna Maheshwari, David McCabe, Edmund Lee, Mohammed Hadi, Matt Phillips, Ben Casselman, Jason Karaian, Niraj Chokshi, Neal E. Boudette, Steve Lohr and Mike Isaac. Reporting was contributed by Karen Weise, Jack Nicas, Clifford Krauss, Jack Ewing, Stanley Reed, Kate Conger, Ben Dooley, Nelson D. Schwartz, Alexandra Stevenson, Sapna Maheshwari, David McCabe, Edmund Lee, Mohammed Hadi, Matt Phillips, Ben Casselman, Jason Karaian, Niraj Chokshi, Neal E. Boudette, Steve Lohr and Mike Isaac.