U.S. equities rose on Monday, clawing back from last week's losses. A possible reopening of parts of the economy boosted investor sentiment. However, oil continued to fall on growing concerns that storage will soon reach capacity. Here's what happened.
- S&P 500 closed up 1.47% for its 3rd positive day in 4
- This month: S&P 500 is up 11.37%, on pace for its best month since Jan 1987
- This year: S&P 500 is down 10.9%, on pace for its worst year since 2008
- Dow closed up 1.51% for its 4th straight positive day closing above 24,000 for the first time since April 17
- This month: Dow is up 10.11%, on pace for its best month since Oct 2002
- This year: Dow is down 15.43%, on pace for its worst year since 2008
- Nasdaq Composite closed up 1.1%
- This month: Nasdaq Composite is up 13.38%
- This year: Nasdaq Composite is down 2.7%
- Sectors: 11 out of 11 sectors were positive today led by Financials up 3.6% for their best day since April 17 —Francolla, Fitzgerald
All three major indexes climbed higher on Monday as some of the most beaten down stocks surged. The Dow rose 353.6 points, or 1.49%. The S&P 500 rose 1.45% and the Nasdaq climbed 1.11%. Major retail stocks, which have been hammered as the coronavirus led to widespread closures, rallied as more states announced that some businesses will soon be allowed to reopen. Kohl's, Nordstrom, Gap and Simon Propert Group all rose more than double digits. — Pound
A prospective vaccine for the new coronavirus developed at Oxford University's Jenner Institute is scheduled to be tested on more than 6,000 people by the end of May, according to a report in the New York Times. The virus showed promise in protecting monkeys from the virus in an experiment run by the National Institute of Health in Montana. That study has not been peer-reviewed. Oxford scientists told the Times that, if regulators grant emergency approval, a few million doses of the vaccine could be available by September. — Pound
With roughly one hour left in the session, the major averages traded near their session highs amid hopes that more states will reopen their economies. The Dow rose 357 points, or 1.5%. The S&P 500 climbed 1.5% while the Nasdaq Composite advanced 1.1%. States including Alaska, Georgia, South Carolina, Tennessee and Texas are beginning to allow restaurants and other establishments to serve customers. Ohio Gov. Mike DeWine said consumer retail and services can start reopening on May 12. — Imbert
Oil prices dropped on Monday, extending recent losses that's seen eight negative weeks in nine, on ongoing fears that worldwide storage will soon be full. West Texas Intermediate for June delivery fell 24.56%, or $4.16, to settle at $12.78 per barrel, after earlier trading as low as $11.88. International benchmark Brent crude fell 6.76% to settle at $19.99. The WTI contracts for July and August delivery also slipped, suggesting that the Street doesn't see a meaningful recovery in the coming months. – Stevens
The stocks leading Monday's rally are some of the worst performers during the coronavirus crisis. The ten best-performing S&P 500 stocks today are down an average of 44% over the past three months, according to FactSet. Monday's winners are apparel company PVH and Kohl's, which are both up more than 13%. Mall owner Simon Property Group and Tapestry both gained more than 11%. Nordstrom, Gap, L Brands, Hanesbrands and MGM Resorts all surged more than 10% and Live Nation Entertainment gained 9.9%. — Fitzgerald
Ohio Gov. Mike DeWine announced Monday that consumer retail and services can reopen on May 12. The businesses that reopen must still ensure a minimum of six feet between people and masks are mandatory. Food courts will still be closed. Ohio first implemented a shelter-in-place order on March 23. — Pound, Reuters
While the rally from the late-March lows has been eye-popping, it has been weaker than the rebound from the 2018 lows into 2019, BofA Securities' Stephen Suttmeier said in a note. In the first 23 sessions after the S&P 500 hit its December 2018 bottom, New York Stock Exchange-listed stocks registered over 11,000 advances. This time around, however, NYSE-listed stocks have had just 4,001 advances. "The S&P 500 may be floating like the butterfly with much weaker breadth for NYSE stocks," Suttmeier said in a note. —Imbert, Bloom
A new CNBC index that tracks the stock performance of companies working on a coronavirus cure shows just how closely the broader stock market rebound is pegged to a viable Covid-19 treatment or vaccine. The S&P 500 and the CNBC Covid-19 Testing & Treatments Index have moved in tandem since the market bottomed on March 23.
CNBC's Covid-19 Testing & Treatments Index is equal-weighed and currently comprised of 29 companies that are working on testing and treating the novel coronavirus. Its components are a mixture of pharmaceutical and biotechnology companies ranging from Eli Lilly to Gilead Sciences. — Franck
Home sales nearly ground to a halt at the end of March, as the coronavirus pandemic forced an economic shutdown that scuttled open houses and shattered consumer confidence. Now, demand appears to be coming back, especially for newly built homes. In the initial four weeks of the national shutdown, sales of newly built homes began falling precipitously, down 85% from normal spring activity by the fourth week. In the past two weeks, however, the numbers have started to climb, according to John Burns Real Estate Consulting, which tracks hundreds of builders nationwide. "We're still down roughly 65%, but more positive news is coming out of the new home market, particularly for builders who are targeting the first time and entry level buyers," said Devyn Bachman, manager of research at JBRC. She noted that a wave of renters are leaving their apartments and eyeing new homes. In her research, Bachman found demand for new construction heavily skewed toward renters, especially young couples with two incomes who feel secure in their employment. —Olick
DoubleLine CEO Jeffrey Gundlach said Monday the market could retest its March low as investors could be underestimating the social disruptions from the coronavirus. "I think a retest of the low is very plausible," Gundlach said on CNBC's "Halftime Report." "People don't understand the magnitude of ... the social unease at least that's going to happen when ... 26 million plus people have lost their job." The so-called bond king revealed he just initiated a short position against the stock market, betting that U.S. stocks will go down again. "Actually I did just put a short on the S&P at 2,863. I think downside easily to the lows or beyond... I'm not nearly where I was in February when I was very, very short," Gundlach said. —Li
Billionaire hedge fund manager Jeffrey Gundlach said Monday the the iShares IBoxx $ Investment Grade Corporate Bond ETF (LQD) is "about the most overvalued asset in the bond market" since the Federal Reserve started buying it in an effort to sustain the economy and credit markets. The ETF has rallied nearly 23% since hitting a low on March 19. Gundlach also noted the ETF came within 3% of a record after the Fed announced on April 9 it would buy corporate bonds through exchange-traded funds, specifically LQD. Gundlach also cautioned against being overly optimistic in this environment. "I would caution investors to be wary of panaceas," he said. —Imbert
The recent bounce-back in stocks from their historic coronavirus rout has been quiet narrow, favoring only a few stocks, according to Matthew Maley, chief market strategist at Miller Tabak + Co. However, Monday's rally sees Microsoft, Apple. Amazon, Facebook and Alphabet in negative territory. "We're a LONG way from declaring that this sudden divergence will create a problem for the stock market. It could easily just by a very-short-term divergence which dissipates quickly. However, we thought it was still worth pointing out," Maley told clients. — Fitzgerald
Charlie Munger, vice chairman of Berkshire Hathaway, will not be taking questions at the company's annual shareholder's meeting alongside Warren Buffett as the coronavirus pandemic forces changes to the widely anticipated event. Instead, it will be Greg Abel, Berkshire's vice chairman of non-insurance operations, taking previously submitted questions with Buffett. Abel was promoted to his post in 2018 and is thought to be a contender to succeed Buffett one day. At last year's meeting, Abel answered some questions from shareholders in a rare occurrence. Buffett and Abel will be the only ones physically attending the meeting, which is scheduled for Saturday. Others will have the option of streaming it via Yahoo Finance. — Imbert
About a quarter into earnings season, companies have proved the coronavirus is denting corporate profits. The 25% of S&P 500 companies that have reported so far have seen a 15% drop in earnings from a year ago, according to Refinitiv. They also reported results 3.6% below analysts' expectations. The upcoming week is the busiest week of earnings season with 145 S&P 500 companies set to report. — Fitzgerald, Hum
The major averages started the week on the right foot as some states began to re-open their economies, easing some stay-at-home orders and allowing some businesses to resume operations. The Dow was up about 300 points, or 1.3%. The S&P 500 climbed 1.4% while the Nasdaq advanced 1.3%. —Imbert
- Las Vegas Sands, Kohl's, Gap, MGM Resorts — These stocks all rose sharply as hopes of a broader reopening of the U.S. economy increased with some states easing stay-at-home orders and allowing some businesses to resume operations. Las Vegas Sands and Kohl's both gained over 8% while Gap advanced 7.3%. MGM Resorts traded nearly 9% higher.
- Twitter — Twitter gained more than 4% after Mizuho upgraded the social media company to neutral from underperform, saying the coronavirus impact is already reflected in the stock price. Twitter is set to report its quarterly earnings on Thursday.
- Caterpillar — Caterpillar dropped 1.6% on Monday after Morgan Stanley downgraded the machinery stock to underweight from equal-weight. The bank said in a note to clients that a multi-year downturn in non-residential construction could hurt the stock. The industrial bellwether is slated to release its quarterly earnings on Tuesday morning.
- Deutsche Bank — The U.S.-listed shares of the German bank rose more than 11% on the back of a surprising preliminary profit for the first quarter. Deutsche posted a net income of 66 million euro after analysts expected the bank to post a loss. — Imbert
The Russell 2000 index of small-cap stocks jumped 3.2% on Monday, outperforming the S&P 500 which is up 1.3%. The coronavirus pandemic has hit small businesses with little cash on hand the hardest. The group started to rebound after the government rolled out its relief package dedicated for small businesses trying to keep employees on the payroll amid nationwide shutdowns. Investors cheered the possibility of re-opening the economy as several states are beginning to allow restaurants and other establishments to serve customers. The Russell 2000 has recently posted two weeks of gains in three. Still, its 2020 performance lags the S&P 500, down about 25%.— Li
New York Governor Andrew Cuomo said hospitalizations in New York are "basically flat." "Flat is not great," Cuomo said a press briefing on Monday, "but flat may be a reaction to the weekend, Sunday discharged may be down." "We don't want to see flat, we want to see an increasing decline." Cuomo said there are 1,000 new cases of COVID-19 every day in New York state, which is down "a tad." On Saturday, 367 people died from coronavirus and on Sunday there were 337 deaths from the virus in New York. —Fitzgerald
Stocks that would benefit most from a reopening of the economy led the market higher on Monday. Casino stocks MGM Resorts and Wynn surged 8% and nearly 6%, respectively. Las Vegas Sands rose more than 9%. Cruise lines also got a boost with Carnival jumping more than 6% and Norwegian Cruise Line gaining 8%. Retailers, one of the hardest hit industries from the coronavirus pandemic, also rebounded on hopes of reopenings. Gap jumped 4.5% and Kohl's soared about 9%. Apparel company PVH rose 8.7% and department store Nordstrom gained about 8%. —Fitzgerald
Stocks picked up steam in morning trading with the Dow Jones Industrial Average rising more than 280 points, or more than 1%. The Nasdaq Composite rose about 1.1% and the S&P 500 gained about 1.2%. — Fitzgerald
10:50 am: Oil ETF dumps plunging June oil contract as Cramer says hedge funds are trying to crush the fund
The United States Oil Fund dropped more than 15% on Monday after it announced its latest structural change in a desperate attempt to stay above water. With losses mounting in the fund, which trades under the ticker 'USO' and is popular with retail investors, Jim Cramer said he wishes investors "the best of luck."On Monday USCF, the fund's administrator, said that over the next three days the USO will sell all of its West Texas Intermediate contracts for June delivery, in favor of longer-term contracts. "There is this financial problem: people who are buying the USO they are financial people so if you're a real person or you're a large contractor, a large player ... they can wipe out the USO. And I think that's been what's going on. It's not a conspiracy, it's a reality. When you have an organization that can't take delivery, well you should crush that organization every time, and that's what probably happened," Cramer said. – Stevens
10:25 am: Analysts downgrade several stocks, including Amazon and Caterpillar, as Wall Street's dismal earnings season continues
- Morgan Stanley downgraded Caterpillar to underweight from equal weight.
- R5 Capital downgraded Amazon to sell from buy.
- Mizuho upgraded Twitter to neutral from underperform.
- UBS downgraded Gilead to neutral from buy.
- MKM downgraded Papa John's to neutral from buy.
- UBS downgraded Beyond Meat to sell from neutral.
- Citi upgraded LabCorp and Quest Diagnostics to buy from neutral. —Bloom
Shares of Big Lots jumped 6% in early trading on Monday after the retailer said it continues to exceed its sales expectations as its stores remain open for business amid the coronavirus pandemic. The company said it experienced a significant acceleration of sales in the last two weeks, marking an increase in same-store sales growth compared to the same period a year ago. The stock has soared 50% this month alone, on pace for its best month since February 1999. However, shares are still down 25% this year. –Li
"You're looking at something like minus 20% to minus 30% in the second quarter" for GDP, White House senior economic advisor Kevin Hassett told CNBC on Monday. Hassett, who recently rejoined the Trump administration, also said on "Squawk Box" that he expects April's unemployment rate to surge to 16% or 17%. Hassett last summer left his post as chairman of the White House Council of Economic Advisors after two years. — Belvedere
Bank stocks helped push equities higher on Monday with JPMorgan rising 2.15% and Goldman Sachs gaining about 1.5%. Citi rose more than 2% and Bank of America ticked about 1.9% higher. Wells Fargo was the biggest winner among large U.S. banks, rising nearly 3% in early trading. Banks likely got a boost from rising interest rates, as investors ditched safe haven assets in hopes of the economy reopening. Last week, investor Steve Eisman said U.S. banks are an attractive investment following the coronavirus-induced market sell-off. — Fitzgerald
Jim Cramer said on "Squawk on the Street" that the June futures contract for West Texas Intermediate crude will go to zero just like the May contract did last week. "This has to go to zero again, because we haven't any more space," Cramer said on "Squawk on the Street." "I had, Herbjørn Hansson, who's the CEO of the largest tanker company, Nordic American Tanker, on Friday, and he said look there's no room. So why shouldn't this number go to zero? It should go to zero faster than it did last time."The June contract was trading at roughly $12 per barrel on Monday morning. — Pound
U.S. equities opened in positive territory on Monday, with the Dow Jones Industrial Average rising 120 points, or 0.55%. The S&P 500 jumped 0.75% and the Nasdaq Composite gained 0.92%. Boosting investor sentiment is the possibility of a partial reopening of the economy. — Fitzgerald
Due to the economic ramifications of the coronavirus, earnings season has never been this trivial, according to Evercore ISI. "It's hard for us to recall a time when earnings reports seemed less important," Evercore technology analyst Benjamin Black told clients. "In the context of a global pandemic, 30-50% declines in GDP, and an uncertain shape of potential recovery – 1Q results will offer only a 2-week window of possible extrapolation into the current situation, and management teams will likely be reluctant to offer explicit forecasts amidst forces so far out of their control," he added. That said, the Wall Street firm is looking for earnings commentary about changes to investment plans to address revenue shortfalls and divergent trends in subscription businesses. —Fitzgerald
Northwell Health in New York City started testing high doses of over-the-counter heartburn drug on patients with coronavirus infection, according to a Sunday report from the Science Magazine. As of Saturday, 187 patients in critical status including many on ventilators, have been enrolled in the trial, and the study aims for a total of 1174 people, the publication said. The drug famotidine is the active ingredient in over-the-counter heartburn Pepcid, and the study calls for nine times the heartburn dose. Billionaire investor Bill Ackman, who had sounded dire warnings about the pandemic, spotted the study and called its early results "promising." – Li
Morgan Stanley's Michael Wilson said in a note he is a bit more optimistic than others as early signs show the consumer is more resilient than feared. "The excesses of the prior expansion were centered in the corporate channel, meaning the consumer came into this recession in better shape than in the Great Financial Crisis," Wilson said, adding: "The stimulus is directed right at the consumer this time and provides a bridge to the other side. This may be one reason why consumer confidence and individual investor sentiment don't look as dire as corporate and institutional surveys." —Imbert
Energy stocks came under pressure on Monday as oil prices continue to slide. The Energy Select Sector SPDR Fund, which tracks the sector and trades under the ticker 'XLE,' traded 0.3% lower during premarket trading. EOG Resources and Schlumberger each fell more than 1% on the heels of West Texas Intermediate's more than 20% decline on Monday. WTI has plunged more than 70% this year, and with prices at historic lows producers are struggling to breakeven. On Sunday Houston-based Diamond Offshore Drilling filed for bankruptcy. – Stevens
The iPhone maker is delaying the production of its phones that are supposed to be release later this year due to the coronavirus, according to the Wall Street Journal. Apple is pushing back production by about a month as the deadly virus dented consumer demand and interrupts manufacturing in Asia, the report said on Monday. Apple's new iPhone has been long awaited due to its access to 5G. Shares of Apple rose slightly in premarket trading. — Fitzgerald
Goldman Sachs said in a new note that the reliance of the stock market on a few mega-cap tech stocks could mean that the recent rally will stall. The five biggest stocks in the S&P 500 now account for 20% of the index's market cap, making the market more concentrated that at the height of the tech bubble. — Pound
Oil prices fell again on Monday on growing concerns that storage will soon reach capacity. West Texas Intermediate for June delivery fell 24.3%, or $4.11, to trade at $12.88 per barrel, while international benchmark Brent crude traded 6.2% lower at $20.11 per barrel. Each contract is coming off its eighth week of losses in nine weeks. The coronavirus pandemic has cut worldwide demand by as much as one third, according to some estimates, and as producers continue to pump oil analysts say there will soon be nowhere to store it. "The storage clock is ticking for producers and we are approaching the final countdown if no further action is taken," said Bjornar Tonhaugen, head of oil markets at Rystad Energy. – Stevens
Amazon's robust profits will be dented by the coronavirus crisis as its money-making segments slow and the cost of doing business increases, according to R5 Capital. The Wall Street firm lowered its rating on Amazon to sell from buy, making R5 Capital the only firm on Wall Street that doesn't recommend owning Jeff Bezos' e-commerce giant. R5 Capital also slashed its price target to $1,987 per share from $2,408 per share, implying a 20% fall from Amazon's closing price of $2,410.11 on Friday. "With the stock, however, having appreciated meaningfully and reaching our $2,408 price target in the face of dramatically worsening current economic conditions and rising future uncertainty, we believe prudence dictates reducing exposure to the equity," R5 Capital analyst Scott Mushkin said in a note to clients. R5 Capital said Amazon's earnings on Thursday will show slower growth and higher expenses in 2020 and 2021. — Fitzgerald
General Motors said on Monday it has suspended its quarterly cash dividend payments and its share buybacks to preserve cash amid the coronavirus crisis. Shares of GM dropped 2% in premarket trading following the announcement. "We continue to enhance our liquidity to help navigate the uncertainties in the global market created by this pandemic," chief financial officer Dhivya Suryadevara said in a statement. The company also said it extended a three-year revolving credit agreement for $3.6 billion to April 2022.—Li
Communities in less populated areas of New York could start to reopen gradually around mid-May, according to a plan set forth Sunday by Gov. Andrew Cuomo. With coronavirus cases on the decline after weeks of social distancing measures, Cuomo said a phased reopening can start happening shortly after May 15. Industries including construction and manufacturing would be the first back to work, while restaurants and retail would be further back. Progress on the economic rebooting would be monitored every two weeks. New York City, where cases remain high, likely wouldn't be opened until considerably later. – Cox
Shares of Beyond Meat jumped more than 2% in premarket trading on Monday, as the plant-based meat producer sees growing demand amid meat shortage fears. Beyond Meat soared a whopping 41% last week, posting its best weekly performance since going public in May. The stock extended its recent rally on Monday as investors shrugged off a downgrade from UBS. The bank slashed its rating on Beyond Meat to sell from neutral, saying the rebound doesn't price in the risk of an economic downturn. – Li
Stocks that would benefit most from a reopening of the economy led the way higher on Monday morning. Airlines, one of the industries that took the hardest hit from the coronavirus, climbed higher in premarket trading with American Airlines, Delta and United all rising about 2%. Casino stocks were on the rise in premarket as MGM Resorts and Wynn gained 1.7% and 2.4%. Retailers also rebounded with Gap and Kohl's jumping 1.8% and 2.5%, respectively. — Li
Stock futures jumped in early trading on Monday and pointed to gains at the open on hopes that some states will start to ease coronavirus-driven lockdowns. Dow Jones Industrial Average futures were up 219 points and implied an opening gain of around 208 points. S&P 500 futures rose 0.91% and Nasdaq 100 futures added 1.2%.
Last week, stocks experienced their first losing week in three, as oil plunged due to an evaporation of demand during the coronavirus crisis. The Dow lost 1.93%, the S&P 500 fell 1.32% and the Nasdaq Composite was down 0.18% for the week following oil's historic plunge. OIl was falling again on Monday, down 17%.
— CNBC's Jeff Cox, Pippa Stevens, Fred Imbert and Jesse Pound contributed reporting.
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