A view of people passing by New York Stock Exchange in Wall Street amid Coronavirus Pandemic on April 5, 2020.
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U.S. equities climbed on Tuesday thanks to investor optimism about states’ progress to reopen parts of their economies. California will permit clothing stores, bookstores and flower shops to reopen for curbside pickup as soon as Friday while New York plans to ease restrictions on manufacturers, construction and select retailers next week. Stocks sensitive to reopening efforts — such as Starbucks and Marriott — outperformed on Wall Street.
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11:28 am: Consumer debt jumps to new record of $14.3 trillion to start year
Consumer debt swelled to a new record in the first quarter, hitting $14.3 trillion amid rises in student and auto debt. A decline in credit card debt helped offset some of the total as consumers began adjusting to the economic slowdown brought about by the coronavirus. The new total eclipses the previous record, set in the third quarter of 2008, by $1.6 trillion, according to the New York Federal Reserve. — Cox
10:32 am: Disney rises despite downgrade
Shares of Disney rose 1.7% in early trading despite being downgraded from neutral to sell by LightShed Partners’ Richard Greenfield. The stock has been downgraded by several Wall Street analysts, including Michael Nathanson on Monday, as the economic restrictions from the coronavirus pandemic hit several of Disney’s business lines. The company is set to report earnings for its fiscal second quarter after the bell. — Pound
10:19 am: Goldman still expects ‘solid’ demand for cruises after Norwegian warns of possible bankruptcy
Norwegian Cruise Line announced it received an injection of liquidity from private equity on Tuesday morning and, according to Goldman Sachs, it should allow the company to start sailings again. “While we expect demand to be solid, we see limitations from potential impacts to the addressable market (CDC advises older passengers to avoid sailing – link), and to each ship’s occupancy levels given likely social distancing standards (we estimate 50%-60% occupancy through 2021), though changes to these assumptions could drive meaningful upside/downside to our estimates,” Goldman analyst Stephen Grambling said.
The firm said it was keeping its neutral rating and $15 price target on the stock. Norwegian was the single-worst performer in the S&P 500 Tuesday morning, down 20%. — Bloom
10:14 am: US services sector suffers biggest contraction since 2009
Activities in the services sector went into a tailspin in April amid nationwide lockdowns aimed at containing the coronavirus. The ISM nonmanufacturing index dropped to 41.8 in April from 52.5 in March, showing the first contraction in services since December 2009. It was also the biggest contraction for the sector since March 2009, when the index hit 40. Anthony Nieves, chair of the Institute for Supply Management, said the massive month-over-month drop “was primarily a product of supply problems related to the coronavirus (COVID-19) pandemic.” — Li, Imbert
10:06 am: Here are Tuesday’s biggest analyst calls of the day: Alphabet, L Brands, Harley-Davidson & more
- BMO upgraded L Brands to outperform from market perform.
- Argus upgraded Harley-Davidson to buy from hold.
- Rosenblatt initiated Salesforce as sell.
- Atlantic Equities downgraded Wells Fargo to underweight from neutral.
- Canaccord initiated DraftKings as buy.
- Bank of America downgraded Tyson Foods to neutral from buy.
- Deutsche Bank raised its price target on Alphabet to $1,700 from $1,625.
- LightShed Partners downgraded Disney to sell from neutral.
9:58 am: Energy stocks lead the S&P 500 up 1.5% as oil prices rally
Energy stocks including major oil and gas drillers and refiners led the broader stock market higher on Tuesday. The S&P 500 energy sector rose 3.5% and helped carry the S&P 500 up 1.5% within the first half hour of the regular session thanks to a 16% rally in WTI futures. All of the S&P 500 sectors rose and gains in big chipmakers like Lam Research and Applied Materials and retailers like Kohl’s and Starbucks outperformed the broader market. The Dow was last seen up 350 points (1.45%) while the Nasdaq Composite added 1.66%. — Franck
9:45 am: Natural gas breaking out on surprisingly cold weather and oil shut-ins
A shocker cold spell in the Eastern U.S., combined with massive drilling cutbacks, boosted natural gas prices above a key level, and some traders say it could break out more. Natural gas futures soared above $2 per unit traded Tuesday after edging near that level Monday. The June contract was trading at $2.10, a five-month high. According to U.S. government weather data, high temperatures in the northeastern quarter of the country are expected to be 10-to-15 degrees below normal during the next two days, with cooler temperatures in the upper Ohio River valley, central Appalachians and Mid-Atlantic. Weathermodels.com forecasts temperatures as much as 20 degrees below normal over the next 10 days. Natural gas had already begun to move higher on the steep cutback in oil drilling, which reduced the amount of associated gas as well. The total rig count, or number of oil and gas wells in production, has fallen from 1,051 to 435 over the past year. — Domm
9:30 am: Dow jumps 230 points on reopening optimism
The Dow Jones Industrial Average jumped 230 points, nearly 1%, to start Tuesday’s session as optimism about gradual U.S. state reopenings sent investors into risk assets. Stocks of companies that would see much better business with reopenings — such as American, United and Delta Airlines — led the way, each up more than 3.5%. Starbucks rose more than 3% as its CEO said some 85% of its U.S. company-operated locations would be open by week’s end. — Franck
9:25 am: Oil rises 13%, on track for fifth straight positive session
Oil prices jumped on Tuesday, lifted by hopes of a coming recovery in demand as economies around the world reopen. West Texas Intermediate, the U.S. benchmark, rose 13% to trade at $23.25 per barrel, while international benchmark Brent crude gained 7.8% to trade at $29.32. Both contracts are on pace for their fifth straight day of gains. President Donald Trump cheered the move higher, tweeting “Oil prices moving up nicely as demand begins again!” — Stevens
9:18 am: Starbucks rallies 3.8% after reopening announcement
Starbucks stock climbed nearly 4% in premarket trading after CEO Kevin Johnson said that over 85% of its U.S. company-operated locations will be reopened by the end of the week. The coffee chain said it plans to have more than 90% of cafes open by early June with limited hours and operational changes in light of the ongoing Covid-19 pandemic. — Franck
8:59 am: Norwegian Cruise Line shares dive amid ‘substantial doubt’ about its ability to continue
Shares of Norwegian Cruise Line dropped more than 10% in the premarket after the company said there is “substantial doubt” about its ability to move forward from the coronavirus pandemic as its impact on the cruise operator is beyond containment. The virus “is expected to continue to impact our results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price,” Norwegian Cruise Line said, noting it expects to report a loss for the first calendar quarter and for 2020. Norwegian shares are down more than 75% for 2020. —Imbert
8:03 am: States continue to relax distancing rules as growth in cases ebbs
More states are beginning to relax social distancing guidelines as the growth in coronavirus cases appears to slow. Indiana, Kansas and Missouri this week have begun various degrees of first-phase reopening. California is projecting to start the second phase of its normalization that will see “low-risk” businesses able to come back, along with expansion of curbside options for other businesses. Confirmed coronavirus cases in the U.S. rose by 1.9% Monday, the first sub-2% growth day since the crisis started, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics. Shepherdson points out that Germany began relaxing its social distancing measures when it reached 2.9% case growth, and is now headed toward “de minimis” gains, or less than 100 per day, by May 25. –Cox
7:58 am: Investors load up on individual stocks and sell ETFs, BoA says
Investors added individual stocks to their portfolios last week and were net sellers of ETFs as they become more selective in their bets of an economic reopening, data compiled by BofA Securities showed. The data showed the bank’s clients bought individual stocks in nine of the 11 S&P 500 sectors, led by near-record inflows into health care. That sector, BofA Securities says, has seen inflows in 13 of the past 14 weeks. Consumer discretionary and tech rounded out the top three sectors in terms of inflows. —Imbert, Bloom
7:57 am: Reopening stocks pushing higher
Stocks poised to benefit from government officials allowing business to reopen were outpacing the broader market in premarket trading. Casino stock Wynn Resorts gained 4.7%, while shares of movie theater chain AMC rose 4.2%. In the retail sector, shares of Simon Property Group surged more than 4%, while Macy’s rose 3.8%. —Pound
7:41 am: Big tech stocks rise again
Shares of big cap technology companies rose again on Tuesday in premarket trading, continuing their recent strength. Shares of Microsoft jumped 1%, shares of Apple rose 0.8%, Amazon jumped 0.5%. Google-parent Alphabet rose 0.5% and Facebook rose nearly 1%. Streaming giant Netflix ticked 0.75% up in premarket trading. On Monday, strength in the biggest technology companies lifted the broader market out of negative territory. —Fitzgerald
7:30 am: Airline stocks rise, try to snap 3-day slide
Airline stocks were up during premarket trading as they tried to curb a three-day losing streak. American shares traded 4.7% higher along with United. Delta was up 3.5% before the bell. Airlines fell broadly on Monday after Warren Buffett said he sold his entire stake in the space following steep losses from the coronavirus pandemic. —Imbert
7:27 am: Pfizer begins human vaccine trials in the US
Pharmaceutical giant Pfizer on Tuesday announced that the first human participants in the U.S. have received a dose of its potential Covid-19 treatment, BNT162. Pfizer first gave its vaccine, which compels cells to build antigens via messenger RNA, to participants in Germany late last month. The U.S. trial will test adults between the ages of 18 and 55 in its initial stage before graduating to older groups; Pfizer says it hopes to test up to 360 people. Pfizer shares rose 1.8% in premarket trading following the company’s announcement. —Franck
7:17 am: Stock futures jump as hopes about economy reopening increase
U.S. stock futures jumped on Tuesday morning as investors increased bets that the global economy would soon reopen. Dow Jones Industrial Average futures traded 235 points higher, or 1%. S&P 500 futures gained about 1% while Nasdaq 100 futures traded 1.1% higher. California Gov. Gavin Newsom said Monday some of the state’s retailers will be allowed to offer curb-side pickup starting Friday. New York Gov. Andrew Cuomo said that the daily number of hospitalizations and new deaths are declining, suggesting the state is on “the other side of the mountain.” Equity futures also got a boost as oil prices traded higher for a fifth straight day. —Imbert
— With reporting from Michael Bloom, Jesse Pound, Patti Domm and Jeff Cox.
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