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Stocks advance on reopening hopes, but pare gains into close
05-May-20 16:20 ET

Dow +133.33 at 23883.09, Nasdaq +98.41 at 8809.14, S&P +25.70 at 2868.44

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The S&P 500 rallied as much as 2.0% on Tuesday, as investors continued to buy into the reopening narrative, but stocks pared gains late in the day to leave the benchmark index up 0.9% for the session. The Nasdaq Composite increased 1.1%, the Dow Jones Industrial Average increased 0.6%, and the Russell 2000 increased 0.8%.

Positive reopening news included California announcing plans to reopen parts of its economy as early as Friday, joining a growing list of U.S. states to have already opened or outlined plans. Starbucks (SBUX 72.90, +1.01, +1.4%) said it expects to have 85% of its U.S. stores open again by the end of the week, excluding dine-in service.

The market might have gotten ahead of itself, though, as the news flow didn't provide it any new revelations. Neither did a CNBC interview with Fed Chair Clarida, but the market lost steam shortly after the interview, perhaps reminded of the relatively high asset prices given the uncertainty still facing an economic recovery/reopening.

The S&P 500 financials sector (-0.1%) slipped into negative territory amid the late-session decline, while the health care sector (+2.2%) was minimally affected. The reopening enthusiasm still buoyed oil prices ($24.53/bbl, +4.16, +20.4%) by 20% amid expectations for a demand recovery.

The health care space received a sentiment boost by news that Pfizer (PFE 38.51, +0.89, +2.4%) and BioNTech SE (BNTX 50.00, +4.22, +9.2%) dosed their first U.S. patients in a clinical trial of a potential COVID-19 vaccine.

The market, conversely, continued to dismiss the dose of bad news, presumably due to a view that it's old news and more good news will follow with increased reopening efforts.

Notably, the ISM Non-Manufacturing Index for April fell into contraction territory with a 41.8% reading (Briefing.com consensus 38.5%), United Airlines (UAL 24.12, -1.14, -4.5%) warned it will likely cut 30% of its management and administrative staff in October, and Norwegian Cruise Line Holdings (NCLH 11.18, -3.26, -22.6%) expressed "substantial doubt" about its future.

U.S. Treasuries ended the session little changed. The 2-yr yield was unchanged at 0.17%, and the 10-yr yield increased two basis points to 0.66%. The U.S. Dollar Index increased 0.3% to 99.78.

Reviewing Tuesday's economic data:

The ISM Non-Manufacturing Index for April dropped to 41.8% (Briefing.com consensus 38.5%) from 52.5% in March. A number below 50.0% is indicative of contraction. The April reading was the lowest reading for the index since March 2009.
The key takeaway from the report is that, like the ISM Manufacturing Index, it was not as "good" as the headline number suggests given that there was a spike in the Supplier Deliveries Index (to all-time high 78.3% from 62.1%), which is largely indicative of supply problems due to the COVID-19 impact.
The Trade Balance report for March showed a widening in the deficit to $44.4 billion (Briefing.com consensus -$44.2 billion) from an upwardly revised $39.8 billion (from -$39.9 billion) for February. Exports were down $20.0 billion from February while imports were down $15.4 billion.
The widening in the deficit was the result of exports declining more than imports, yet the key takeaway is that the large declines in both reflect weak trade activity in the wake of COVID-19 shutdown issues that only got worse in April.

Looking ahead, investors will receive the ADP Employment Change Report for April and the weekly MBA Mortgage Applications Index on Wednesday.

Nasdaq Composite -1.8% YTD
S&P 500 -11.2% YTD
Dow Jones Industrial Average -16.3% YTD
Russell 2000 -23.7% YTD


Market Snapshot
Dow 23883.09 +133.33 (0.56%)
Nasdaq 8809.14 +98.41 (1.13%)
SP 500 2868.44 +25.70 (0.90%)
10-yr Note -24/32 0.659

NYSE Adv 1626 Dec 1274 Vol 927.1 mln
Nasdaq Adv 1736 Dec 1472 Vol 3.9 bln


Industry Watch
Strong: Energy, Health Care, Information Technology

Weak: Consumer Staples


Moving the Market
-- Stock markets trades sharply higher amid reopening momentum

-- Oil prices rise 20% amid expectations for higher demand as states continue to reopen

-- Continued dismissal of bad news



WTI crude rises 20% on reopening optimism
05-May-20 15:25 ET

Dow +294.62 at 24044.38, Nasdaq +161.67 at 8872.40, S&P +43.14 at 2885.88
[BRIEFING.COM] The S&P 500 is up 1.5%, down slightly from session highs.

One last look at the S&P 500 sectors still shows broad-based gains ranging from 0.5% (financials) and 2.6% (health care). The financials sector had been an early leader in today's session.

WTI crude settled up $4.16 (+20.4%) to $24.53/bbl, fueled by expectations that reopening the economy will help demand recover.