A snapshot of other markets for the day is showing:
- Spot gold, plus $15.12 or 0.88% at $1731.36. The price moved above a topside trend line on the daily chart at $1722 area and that break triggered more buying in the precious metal. The high price extended up to $1736.55.
- WTI June crude oil futures rose by $2.45 19.69% to $27.74. The July contract also surged with a gain of $2.39 19.31% to $28.07
The big event today was the initial jobless claims. A total of 2.981 million more workers were added to the unemployment dole. Since mid March, 36.5 million Americans have lost their jobs. Continuing claims came in at 22.833 million. That was actually better-than-expected at 25.120K.
The data initially sent the US stocks to the downside. The major indices opened lower but traded in a very volatile up and down trading range for most of the trading day. However, the dips kept on getting bought and a late day rally helped to close each of the major indices higher, led by the Dow 30 which rose by 1.62% on the day..
The final numbers are showing:
- The S&P index, +32.5 points or 1.15% at 2852.50
- The NASDAQ index closed up 80.556 points or 0.91% at 8943.72
- the Dow industrial average rose 377.37 points or 1.62% at 23625.34
European indices did not benefit from the late day buying in the US market. All the major indices closed with sharp declines led by the UK FTSE which fell by -2.75%.
The US debt market saw yields move lower with the yield curve flattening. The 2 year yield fell by -0.8 basis points, but the 30 year bond fell by a greater -4.6 basis points.
The 2-10 year spread contracted to 47.56 basis points from 49.36 basis points at the end of trading yesterday.
In a Canada, Bank of Canada’s Poloz – in one of his last duties as governor of the central bank – outlined the results of the financial system review. His comments were more upbeat than perhaps the market expected, and that helped to propel the CAD to the strongest of the major currencies today.
On the other extreme was the JPY. It was the weakest of the majors. The USD is sitting in the middle of the range with mixed results. The greenback rose versus the EUR, JPY and CHF, fell versus the CAD, AUD and NZD, and was unchanged versus the GBP.
Some technical comment heading into the new day:
- USDCAD: The loonie was not only the strongest (lower USDCAD), it is closing at the lows for the day. The price low has just reached the 1.4031 level. The level happens to be also where the 100 hour moving average rests. Just above that is the 50% retracement of the May trading range at 1.40355. Just above that level, since the pairs 200 hour moving average at 1.40384. In the new trading day, this area be between 1.4031 and 1.4038 will help define the bias going forward. Move below and the bias is more negative, move above and the bias tilts more to the upside
- EURUSD: The EURUSD had a up and down trading session in the NY trading hours. The early session low dipped below interim support at 1.0777 to 1.0771 but selling momentum could not be sustained. The rally back to the upside traded up to 1.0815 which is the top of a swing area between 1.0808 and 1.0815. The price then rotated back down toward the 1.0777 level only to find buyers once again. The pair is closing right around the 1.0800 level. So open them volatility with a wide range between 1.0777 and 1.0815. In the new day a break outside that range will help determine the next bias for the pair
- USDCHF: The USDCHF gave dip buyers a shot to buy low when it fell to test its 100 and 200 hour moving averages at 0.9712. Risk focused traders leaned against the two moving averages and push the price back higher. The pair is closing at 0.9732. In the new trading day, the moving averages remain the risk defining level for the pair. Stay above (they are currently around the 0.9714 level) and the buyers remain in control. Move below and sellers wrestle control back from the longs.
- USDJPY: The USDJPY traded between the 200 hour moving average below (currently at 106.79) and the 100 hour moving average above (currently at 107.158) in the New York morning session. In the New York afternoon, the price was able to extend above its 100 hour moving average and stay above. The high price extended to 107.36 before rotating back lower into the close. In the new trading day staying above its 100 hour MA will be the risk and bias defining level for traders. Stay above is more bullish. Move below is more bearish.
Wall Street Recovers After a Day of Turbulent Trading
Published May 14, 2020Updated May 15, 2020, 12:06 a.m. ET
This briefing is no longer updating. Read the latest developments in the coronavirus outbreak here.
Stocks end volatile day with a gain as oil prices jump.
Stocks ended a turbulent day of trading on Thursday with a solid gain, after a rebound fueled in part by a surge in oil prices.
The S&P 500 rose more than 1 percent, after recovering from an early drop of nearly 2 percent.
The early drop was fueled partly by the Labor Department’s latest report on unemployment claims, which showed that millions of workers are still losing their jobs.
But stocks rose out of that slump as oil prices jumped, prompting gains in shares of energy companies like oil services giant Halliburton and Occidental Petroleum. West Texas Intermediate, the U.S. crude benchmark, rose about 9 percent. At more than $27 a barrel, oil is now far above the lows that it plumbed in April.
The gains in oil prices came as the chief of the International Energy Agency said on Thursday that he saw “signs of a gradual rebalancing” in the oil market. Global demand for oil fell in April to about 25 percent below its normal level, the agency said, but it is expected to slowly recover as more countries ease lockdown measures.
Financial stocks also rallied on Thursday, with shares of Wells Fargo up more than 6 percent. and Capital One Financial up more than 9 percent.
It’s been a tumultuous week for stocks, as investors heard a drumbeat of warnings about the pandemic and its long-term impact.
On Tuesday, Dr. Anthony S. Fauci spoke about the serious risk of a new outbreak if the economy was reopened too quickly. On Wednesday, the Federal Reserve chair, Jerome H. Powell, warned of permanent damage to the economy if Congress and the White House did not provide sufficient financial support to prevent a wave of bankruptcies and prolonged joblessness.
China’s factories maintained a brisk pace last month, but Chinese consumers were slow to resume shopping, according to official statistics released on Friday.
Many countries have been watching China’s economic performance closely because it is several months ahead of the rest of the world in coping with the virus. The Chinese economy shrank in the first three months of this year for the first time since Mao Zedong died in 1976.
Factories caught up on orders that they had struggled to fill earlier this year, when the coronavirus pandemic raced across the country. The country’s industrial production was up 3.9 percent from April of last year, better than most economists expected. Production had been down 1.1 percent in March from a year earlier and had plunged in February, when the virus outbreak was at its worst in China.
But shopping and fixed asset investment stayed weak. Retail sales were down 7.5 percent in April compared to a year earlier, marginally worse than economists’ expectations.
“We should be aware that given the continuous spread of the epidemic abroad, the stability and recovery of the national economy is still faced with multiple challenges,” said Liu Aihua, the director general of the agency’s department of comprehensive statistics.
Strong exports kept factories busy last month. Many factories were catching up on orders placed while Chinese cities were locked down. But orders for further exports have stalled, according to surveys of purchasing managers.
Despite the progress, tens of millions of migrant workers are unemployed. Many white-collar workers have suffered pay cuts. Weak consumption has some economists wondering how long China can sustain an economic rebound.
A prominent think tank with a $115 million endowment said Thursday it was returning a $8 million federal stimulus loan it received from a program meant to stabilize small businesses.
The Aspen Institute said in a statement that it believed its application was “consistent with the goals of the program” but that on “listening to our communities and further reflection, we have made the decision to return the loan.”
The institute hosts a yearly conference in Aspen, Colo., that has been attended in recent years by prominent names like the Facebook chief executive Mark Zuckerberg and the BlackRock chairman Laurence Fink.
Its receipt of the funds and an outcry from some of its affiliates was first reported on Wednesday by The Washington Post.
The think tank is among the many organizations, including prep schools and large public companies, that have returned their loans through the program after public objection. Critics say the program, administered by the Small Business Administration, has channeled funds to well-connected organizations and left struggling small businesses in the lurch.
A showdown in France tests Amazon’s ability to sidestep labor.
A labor case headed to France’s highest court is testing Amazon’s ability to sidestep the demands of workers who are fulfilling the surge in orders the pandemic has produced for Amazon’s business.
It is also emblematic of why Amazon, based in Seattle, has battled to keep unions out of the company, especially in the United States, its biggest market, write Liz Alderman and Adam Satariano.
Unions in the United States have made few inroads after years of campaigns. But in Europe, national labor laws require companies to deal with them, even if employees aren’t members. With more than 150,000 deaths in Europe from the coronavirus, the groups are leveraging the crisis to reassert influence and press Amazon harder on workers’ rights.
“The only way to push Amazon to action is through confrontation,” said Jean-François Bérot, , who works at an Amazon warehouse south of Paris. “We’re working in conditions that pose a risk to our safety. Workers’ voices must be heard.”
Amazon defended its response to the virus, saying it had put in place more than 150 changes at its warehouses, including providing masks, temperature checks, hand sanitizer, increased time off and higher pay. It expects to have more than $4 billion of coronavirus-related expenses in the current quarter.
“We respect everyone’s right to express themselves, but object to the irresponsible actions of some labor groups who have spread misinformation and made false claims about Amazon during this crisis,” said Stuart Jackson, an Amazon spokesman.
How private equity firms left J. Crew and Neiman Marcus unable to fight in the pandemic.
J. Crew and Neiman Marcus were each facing a host of challenges before the coronavirus pandemic forced them to close their stores and eventually file for bankruptcy.
But they also shared a common problem for retailers in dire straits: an enormous debt burden — roughly $1.7 billion for J. Crew and almost $5 billion for Neiman Marcus — from leveraged buyouts led by private equity firms.
Like many other retailers, J. Crew and Neiman over the past decade paid hundreds of millions of dollars in interest and fees to their new owners, when they needed to spend money to adapt to a shifting retail environment. And when the pandemic wiped out much of their sales, neither had anywhere to go for relief except court, write Sapna Maheshwari and Vanessa Friedman.
The filings by J. Crew and Neiman Marcus followed a wave of retail bankruptcies in the past few years, and came as numerous chains, including J.C. Penney, teetered on the brink because of the pandemic.
J. Crew, which owns Madewell, and Neiman Marcus, which owns Bergdorf Goodman, have vowed to stay in business, but bankruptcies inevitably raise questions about what the future holds for employees, stores and vendors.
Ahead of plans to reopen, McDonald’s sets guidelines for workers.
McDonald’s has distributed a 59-page guide to franchisees outlining procedures for safely operating dining rooms across the country.
The fast food chain will require restaurants to clean digital kiosks every time a customer uses one and sanitize restrooms and other high-touch areas every half-hour, according to a copy of the guide reviewed by The New York Times. The guide also requires the franchisees to place “closed” decals on certain tables to promote social distancing. And it recommends putting signage on the floor to prevent customers from brushing past each other as they move around the restaurant.
All employees will have their temperatures taken before work, and they will be required to wash their hands regularly.
“For dine-in orders, the bag will be placed on a clean sanitized tray and delivered to the customer while maintaining social distance requirements,” the guide states. “Do not forget napkins and straws!”
The guide does not outline a strict timeline for reopening. Once a local government says that restaurants can admit dine-in guests, a McDonald’s official in that region will decide whether to begin reopening, the guide states. Then individual franchise owners will make a decision about whether to go through with reopening.
The guide also includes a Q. and A. section on how to manage guests who refuse to comply with social distancing guidelines.
Meat plant closures mean pigs are being gassed or shot.
As the coronavirus forces meat plants to shut down, hundreds of thousands of pigs have grown too large to be slaughtered commercially, forcing farmers to kill them and dispose of their carcasses without processing them into food.
In Iowa, the nation’s largest pork-producing state, agricultural officials expect the backlog to reach 600,000 hogs over the next six weeks. In Minnesota, an estimated 90,000 pigs have been killed on farms since the meat plants began closing last month.
One Minnesota hog farmer sealed the cracks in his barn and piped carbon dioxide through the ventilation system. Another farmer has considered gassing his animals after loading them into a truck. And a third shot his pigs in the head with a gun. It took him all day.
“There are farmers who cannot finish their sentences when they talk about what they have to do,” said Greg Boerboom, a second-generation pig farmer in Marshall, Minn., who is trying to find ways to avoid killing a backlog of more than 1,000 pigs.
“This will drive people out of farming. There will be suicides in rural America.”
Satya Nadella worries about “what is lost” when everyone works from home.
Microsoft may emerge from the pandemic even stronger than before, thanks to its products that help people work remotely (including its own employees). But the company’s chief executive, Satya Nadella, said that he was “on the lookout for what is lost” in remote work.
Speaking to a group of reporters and editors from The New York Times, as detailed in today’s DealBook newsletter, Mr. Nadella noted that some work force productivity numbers have gone up at the company, but it isn’t something to “overcelebrate.” More meetings start and end on time than before, but “what I miss is when you walk into a physical meeting, you are talking to the person that is next to you, you’re able to connect with them for the two minutes before and after,” he said. Those moments are hard to replicate virtually, as are other soft skills crucial to connecting with co-workers and building a community.
“Maybe we are burning some of the social capital we built up in this phase where we are all working remote,” he said. “What’s the measure for that?”
New jobless claims reflect the pandemic’s economic misery.
The weekly count of new unemployment claims has been declining since late March, but job losses from the coronavirus pandemic continue to mount. The two month tally of workers who joined the U.S. unemployment rolls is now more than 36 million.
Michelle Meyer, head of U.S. economics at Bank of America, said that even with businesses reopening in some states, she doubted that callbacks to work outnumbered additional layoffs from other sectors. The slowdown has been rippling beyond the early shutdowns in retail and hospitality to professional business services, manufacturing and health care.
“In a sense, it’s a rolling shock,” she said.
Jerome H. Powell, the Federal Reserve chair, said Wednesday that Fed research being released Thursday would show that in households making less than $40,000 a year, about 40 percent of those working in February lost their jobs in March.
State unemployment insurance and emergency federal relief were supposed to tide households over during the shutdown. But several states have a backlog of claims, and applicants continue to complain of being unable to reach overloaded state agencies.
According to a poll for The New York Times in early May by the online research firm SurveyMonkey, more than half of those applying for unemployment benefits in recent weeks were unsuccessful.
Homeowners who have temporarily paused their federally backed mortgages because of virus-related hardships have been wondering if they could push those missed payments to the end of their loan. On Wednesday, federal regulators provided an answer: Yes.
Borrowers who reach their final payoff date and still owe the unpaid amount will have to pay it in a lump sum at that time, according to the Federal Housing Finance Agency, which oversees mortgages guaranteed by Fannie Mae and Freddie Mac. If they sell or refinance their homes, they’ll have to pay what they owe then.
Under the CARES Act, homeowners whose mortgages are backed by the federal government are permitted to skip their payments for up to a year.
Homeowners owe the skipped amount in full, and the agency is encouraging borrowers to pay it as soon as they’re able. But even if they have to push the payment to the end of their loan, homeowners will not be charged extra fees or interest on the balance.
There is one caveat: Housing officials said borrowers who were not current on their loans, or were more than 31 days delinquent before March 1, would not be eligible.
The New York Stock Exchange will begin to reopen its trading floor the day after Memorial Day, the exchange’s president, Stacey Cunningham, wrote in an op-ed article in The Wall Street Journal. As part of “measured reopening plans,” floor brokers will return in small numbers and be required to wear masks. Social distancing requirements will be in place, and workers and visitors will be screened before entry.
Disney Theatrical Productions said Thursday that its stage adaptation of “Frozen” would not reopen on Broadway once the pandemic eases, making the musical the first to be felled by the current crisis. “We believe that three Disney productions will be one too many titles to run successfully in Broadway’s new landscape,” Thomas Schumacher, the president of Disney Theatrical Productions, said in a letter to his staff.
Nissan said the head of its North American operation, José Luis Valls, had resigned for “personal reasons” and would leave the company on June 15. Nissan has struggled with anemic sales in the United States, its most important market after China. Jérémie Papin, the senior vice president for finance at Nissan North America, will replace Mr. Luis Valls, the company said.
Leslie H. Wexner, the longtime chief executive officer and chairman of L Brands, stepped down from both roles on Thursday as expected, though he will retain a board seat. Mr. Wexner, 82, the longest serving chief executive of a company in the S&P 500, recently faced serious questions about his leadership because of issues with the company’s culture and his relationship with the disgraced financier Jeffrey Epstein, a convicted sex offender.
Reporting was contributed by Liz Alderman, Adam Satariano, David McCabe, Vanessa Friedman, Gregory Schmidt, Jason Karaian, David Yaffe-Bellany, Michael Corkery, Patricia Cohen, Tiffany Hsu, Stanley Reed, Niraj Chokshi, Li Yuan, Ben Dooley, Carlos Tejada, Jeanna Smialek, Tara Siegel Bernard Jim Tankersely, Matt Phillips, Sapna Maheshwari, Michael J. de la Merced and Kevin Granville.
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