Stocks end in positive territory as Trump claims oil output cut on the way
Stocks were higher from the open despite a record weekly jobless claim figure, but the move seemed tentative. That was until President Trump gave a major boost to oil prices, and subsequently equities, with his tweets about a production cut that may be coming from Saudi Arabia and Russia. U.S. benchmark WTI oil prices had their best ever one-day percentage gain with a jump of 25%, or $5.01 per barrel, to close at $25.32 per barrel after Trump said that Russia and Saudi Arabia were hopefully on board with a 10M barrel per day production cut. Texas oil regulator Ryan Sitton followed up with a tweet of his own saying he spoke with Russian Energy Minister Novak about working together, along with the Saudis, to get "10M bpd out of global supply," though media reports questioned what has been agreed upon yet and exactly how a production cut deal may be negotiated.
ECONOMIC EVENTS: In U.S. data, initial jobless claims spiked 3.34M to 6.65M in the week ended March 28. The trade deficit narrowed 12.2% to $39.9B in February, which was more than expected as imports tumbled 2.5% to $247.5B and exports dropped 0.4% to $207.5B.
Additionally, the Democratic National Committee said that, in light of the coronavirus pandemic, the 2020 Democratic National Convention will now be held the week of August 17 in Milwaukee, Wisconsin. The event was originally scheduled to take place from July 13-16.
In U.K. news, the Bank of England said it intends to purchase at least GBP10B of eligible sterling non-financial corporate bonds in coming months, taking the stock of purchased corporate bonds to at least GBP20B.
Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now 998,047 confirmed cases of COVID-19 and 51,485 deaths due to the disease.
TOP NEWS: The best performers on the S&P 500 were nearly all oil & gas explorers and producers or chemical makers levered to oil after President Trump tweeted that he "spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!"
Following Trump's tweet, a spokesman for Russian president Vladimir Putin, Dmitry Peskov, said Putin had not spoken to the crown prince of Saudi Arabia, Bloomberg reported. Meanwhile, Saudi Arabia has not confirmed an oil production cut, but did call for an "urgent meeting" of the Organization of Petroleum Exporting Countries plus Russia, according to state-run media, Bloomberg added.
Shares of Starbucks (SBUX) rose 3.8% after its competitor in China, Luckin Coffee (LK), announced that it is probing "fabricated transactions" that make its prior guidance unreliable and prompt an investigation of its financial reports. Meanwhile, shares of the Chinese coffee retailer cratered, dropping 75.6%.
Dow member Walgreens Boots Alliance (WBA) reported better than expected earnings and revenue for its second fiscal quarter, but also said it is "not in a position to accurately forecast the future impacts" of the COVID-19 situation given the many rapidly changing variables related to the pandemic.
Ford (F) announced that its overall Q1 sales declined 12.5% in the U.S. "amid the nation's outbreak of coronavirus and multiple state stay-at-home orders." The company's decline, based mainly on the halt of sales and production in March, mirrors similar announcements from peers GM (GM) and FCA US (FCAU) yesterday.
Meanwhile, General Electric (GE) shares were 2% lower after the company told CNBC that it intends to furlough half of its aviation business' engine-manufacturing staff as the coronavirus hits the industry.
Additionally, CNBC also reported that Walmart (WMT) has paused efforts to sell a majority interest in U.K. grocer Asda so it can direct full attention to managing the business as the COVID-19 outbreak has led to a surge in demand for groceries.
MAJOR MOVERS: Among the noteworthy gainers was Criteo (CRTO), which rose 13.3% after the company lowered its first quarter guidance and withdrew its fiscal 2020 guidance. Additionally, Citi analyst Nicholas Jones upgraded Criteo to Buy from Neutral with a price target of $14, down from $16, after resuming coverage of the name.
Among the notable losers was Zoom Video (ZM), which slid 11% in reaction to two "primary items," namely a surge in security-related headlines and a reaction to RingCentral (RNG) launching its own video solution into the market. Also lower was Tesla (TSLA), which closed 5.6% lower after Jim Chanos of Kynikos Associates said during an interview on CNBC that he continues to have a "maximum short" position betting against the carmaker's shares.
INDEXES: The Dow rose 469.93, or 2.24%, to 21,413.44, the Nasdaq gained 126.73, or 1.72%, to 7,487.31, and the S&P 500 advanced 56.40, or 2.28%, to 2,526.90.
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