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Market Recap Week Ending April 17

April 19, 2020

Market Recap Week Ending April 17

Monday – Dow (328) to 23,390 NDAQ +38 to 8,192 and the S&P (28) to 2,789.  The Dow rallied throughout the day from the lower levels at which it opened and closed down 1.4%.  The S&P also closed down just over 1% but the NDAQ squeaked out a gain of 0.50% based on big rallies from tech stocks including Apple (AAPL) +2%, Amazon +6% (beginning to ship nonessential items again), and Netflix (NFLX) +7% (spike in video streaming)…Earnings season kicks off tomorrow with JPMorgan Chase (JPM), Wells Fargo (WFC) and Johnson and Johnson (JNJ) headlining…Governors of 7 east coast states (NY, NJ, MA, CT, PA, DE, RI) and 3 west coast states (CA, WA, OR) plan to create a regional working group to begin designing a business reopening plan…CVD-19 update:  the US mortality rate has crossed 4%.  None of the other industrialized countries (UK, France, Spain, Italy) has a mortality rate of below 10% with the exception of Germany (2.5% but that rate has more than doubled since April 1st)…As of the time of this writing the futures are trading up 300 points.

Tuesday – Dow +558 to 23,949 NDAQ +323 to 8,515 and the S&P +84 to 2,846.  Stocks continued their inexorable advances based on the hope that at least a handful of states will start to reopen their economies in the beginning of May.  In addition, investors are focused on the full power and weight of the US Federal Reserve and Treasury departments that have been brought to bear.  The Dow and S&P are now 16% off their respective all time highs while the Nasdaq is relatively outperforming, down only 5% YTD…Johnson & Johnson (JNJ) beat estimates, increased their dividend by 6.3% and lowered full year guidance due to the pandemic.  Shares traded up 4%…JPMorgan Chase (JPM) traded down 3% on large profit declines, although revenues held steady boosted by their trading desk.  Jamie Dimon, CEO of JPM said that US businesses will likely begin returning employees to their offices in phases starting in June and continuing through August but warned that the process would not  start in May…Liz Ann Sonders, Chief Investment Strategist at Charles Schwab (SCHW) warned that the market may be pricing in an overly optimistic scenario regarding restarting of the economy.

Wednesday – Dow (445) to 23,504 NDAQ (122) 8,393 and the S&P (62) to 2,783.  A dose of economic reality finally introduced some sobriety into the market today following a record drop (down 8.7%) in March retail sales and the the largest factory output decline since 1946.  Tomorrow, weekly jobless claims will be reported.  The last three weeks we have witnesses a staggering 15 million claims.  Tomorrow’s estimate is 5.1 million according to Reuters survey of economists.  Oil fell after the International Energy Agency said that global oil demand could plunge by 29 million bbl/day in April vs last year.  West Texas Crude traded down below $20 for the first time since 2002…JC Penney (JCP) is nearing its death knell.  It missed a $12 million interest payment today and is using the 30 day grace period before default is declared to explore its strategic options.  The stock traded down 27% to $0.23/share…Bank of America (BAC) missed its already lowered estimates and increased loan loss reserves by $3.6 billion…Goldman Sachs (GS) missed on earnings but beat on their revenue number based on the strength of their trading division like JPM yesterday…As of this writing, Dow futures have reversed earlier losses and are trading up 121 points.

Thursday – Dow +33 to 23,537 NDAQ +139 to 8,153 and the S&P +16 to 2,799.  The initial jobless claims print was 5.25 million, bringing the total to 22 million people who have filed for unemployment insurance since the President declared a national emergency on March 13th…The Payroll Protection Program, designed to help small businesses,  stopped accepting loan applications today as the totality of the $369 billion in funding has been tapped out…China reported that their economy shrank 6.8% in the first quarter, ending almost 50 years of continuous growth…As of the time of this writing the Dow futures are screaming up 832 points or 3.5% on a report that Gilead’s (GILD) antiviral drug Remdesivir is showing efficacy in a small group of 125 CVD-19 patients in a Chicago trial.  Also pushing the futures higher was the President’s declaration that some states could reopen for business prior to the May 1st target date.

Friday – Dow +704 to 24,242 NDAQ +117 to 8,650 and the S&P +75 to 2,874.  The indices followed up on the performance of the Dow futures last night for the same reasons; the hope that GILD’s Remdesivir drug will work against CVD-19 and the President’s guidance on reopening some parts of the country.

The week in review…Dow +523 or 2.2% NDAQ +497 or +6% and the S&P +85 or +3%.  Looking at this week’s totals, I’m somewhat shocked that the indices weren’t higher across the board.  Obviously, the technology laden Nasdaq had an incredible week up 6% but I was surprised that the Dow and S&P hadn’t rallied harder than +2.2% and +3% respectively.  It certainly felt to me like a much stronger week than those numbers represent.  The Initial jobless claims number on Thursday was horrific but was lower than the last two week’s numbers.  A one week blip or has unemployment peaked?  Earnings began this week and as expected, the banks were hit hard, missing earnings though some were able to post in line revenue numbers due to their trading operations.  Oil slid to a new low as West Texas Intermediary (WTI) traded down 8% to $18.27/bbl on Friday.  The market seems to be caught between two opposing viewpoints; that we can have a v-shaped recovery, that business will open up again shortly, and that the economy will recover or that we haven’t seen the worst yet considering rising U.S. mortality rates, U.S. jobless claims, U.S. retail sales, U.S. corporate earnings and China Q1 GDP numbers.  This week, the optimists won out.  Hopefully, we will get additional positive data points over the weekend and continue to consolidate this rally.

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