Stocks end lower as U.S. jobs numbers even worse than dire forecasts
The S&P 500 ended lower for the week and closed out on a down note after a bigger than expected drop in payrolls. Scarier still, that data is expected to continue to get worse before it gets better. There have also been issues with the rollout of the small business lending program that the federal government is extending as a lifeline to companies being crushed by COVID-19 related closures and restrictions.
ECONOMIC EVENTS: In U.S. data, nonfarm payrolls dropped by a much larger than anticipated 701,000 in March, abruptly ending a nine and a half year run of employment gains. The unemployment rate jumped to 4.4% from 3.5%. Markit's services index was revised up to 39.8 in the final March print versus the 39.1 preliminary reading, though that was down 9.6 points from the 49.4 reading in February. The ISM non-manufacturing index fell by a smaller than expected 4.8 points to 52.5 in March, holding up surprisingly well. In energy news, Baker Hughes reported that the U.S. rig count is down 64 from last week to 664 rigs.
Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now 1,076,017 confirmed cases of COVID-19 and 58,004 deaths due to the disease.
TOP NEWS: Shares of 3M (MMM) fell 3% after President Donald Trump tweeted last night that the government "hit 3M hard" and that the company "will have a big price to pay" over "what they were doing with their Masks." In response to the announcements issued by the White House last evening, 3M said that the administration requested the company cease exporting respirators made in the U.S. to the Canadian and Latin American markets, noting that ceasing all export of respirators produced in the U.S. would likely cause other countries to retaliate and do the same, meaning that the net number of respirators being made available to the U.S. would actually decrease. Yesterday, the Administration formally invoked the Defense Production Act, or DPA, to require 3M to prioritize orders from the Federal Emergency Management Agency, or FEMA, for its N95 respirators and the company said it has "been working closely with the Administration to do exactly that." In an interview on CNBC, 3M CEO Mike Roman called it "absurd" to think his company is not doing all it can.
Tesla (TSLA) shares rose 5.6% after the car maker said it produced almost 103,000 vehicles and delivered approximately 88,400 vehicles in the first quarter for its "best ever Q1 performance." Model Y production started in January and deliveries began in March, significantly ahead of schedule, the company added.
Bed Bath & Beyond (BBBY) reported last night that it has extended the closure of its retail stores and intends to furough the majority of its store associates until at least May 2, joining a great number of other retailers who have made similar announcements.
Big banks were in focus as the U.S. government's small business lending program for businesses affected by COVID-19 launched today, though not without some concerns. Early in the day, Bank of America (BAC) said it was able to accept online applications for the $350B small business relief program, but other big U.S. banks, including JPMorgan (JPM), Wells Fargo (WFC), and Citi (C), were not able to accept applications for the program, CNBC stated in a midday update. Later, Charles Gasparino of Fox Business Network reported that JPMorgan was taking online applications for small business relief. U.S. Treasury Secretary Steven Mnuchin later weighed in via Twitter, saying that over $1.8B worth of such loans are being processed by the SBA, mostly all from community banks. In his own tweet, President Trump thanked BofA and many community banks throughout the country" for a "great job" helping small businesses.
Meanwhile, Reuters reported that Amazon (AMZN) intends to delay its Prime Day event until at least August and anticipates a potential $100M hit from excess devices it may now have to sell at a discount.
In addition, the Wall Street Journal reported that Walmart's (WMT) U.S. sales are up nearly 20% in the past four weeks compared to the same period last year.
MAJOR MOVERS: Among the noteworthy gainers was Fate Therapeutics (FATE), which rose 8.9% after announcing a global collaboration and option agreement with Janssen Biotech (JNJ) under which Janssen will contribute proprietary antigen binding domains for up to four tumor-associated antigen targets. Also higher was Incyte (INCY), which gained 2% after announcing phase 3 study of Jakafi for COVID-19.
Among the notable losers was Macquarie Infrastructure (MIC), which dropped 24% after it withdrew its guidance, suspended its dividend, and said it is continuing to pursue strategic alternatives. Also lower were Aehr Test Systems (AEHR) and Chewy (CHWY), which fell 18.2% and 4.8%, respectively, after reporting quarterly results.
INDEXES: The Dow fell 360.91, or 1.69%, to 21,052.53, the Nasdaq lost 114.23, or 1.53%, to 7,373.08, and the S&P 500 declined 38.25, or 1.51%, to 2,488.65.