Stocks advanced Monday as investors mulled a patchwork of state plans to slowly roll back social distancing measures. U.S. crude oil prices renewed their slump after four straight sessions of gains.
Both the Nasdaq and S&P 500 ended at their highest levels since early March. The Dow broke above its 50-day moving average for the first time since February 21 during Monday’s session.
In the past week, a handful of states primarily in the South announced some businesses and public spaces would begin to reopen with restrictions, kicking off a multi-phase process of easing the social distancing measures that had been in place over the past several weeks. The decisions were met with criticism from some business owners, epidemiologists and politicians who felt the reopenings – coming as the domestic death toll in the U.S. topped 50,000 – were premature.
Still, recent data has suggested the outbreak was leveling off, even in the states hardest hit by the pandemic. On Monday, New York Governor Andrew Cuomo said in a press briefing that the latest daily death toll in the state dropped to 337, falling from 367 from the prior day, and that the total hospitalization rate was virtually flat. A daily earlier, he’d suggested a phased reopening could begin with construction and manufacturing industries as soon as after May 15, in areas of the state with less concentrated numbers of cases.
The remarks were a testament to the distance the state, the epicenter of the domestic outbreak, had come in flattening the curve for new cases, hospitalizations and deaths with weeks of stay-in-place measures in effect. New York’s known daily death toll had hit a peak of 799 on April 9, just under three weeks ago.
Still, many experts remain deeply concerned about the specter of a resurgence in cases as social distancing measures ease. Dr. Deborah Birx, White House Coronavirus Task Force coordinator, told NBC News on Sunday that while the latest drops in new coronavirus case counts gave her “great hope” for reopening, she believed the U.S. would ultimately need a “breakthrough” in coronavirus testing to get a better sense of the extent of the outbreak and allow for more informed decisions about how and when to reopen.
This week, market participants will be anxiously looking ahead for signs of the path forward for the U.S. economy amid preliminary steps to reopen businesses, while simultaneously digesting key economic reports to assess the damage at the outset of the domestic pandemic.
Investors will receive the first print of first-quarter U.S. gross domestic product, and hear from the Federal Reserve for its latest monetary policy decision on the heels of the central bank’s onslaught of relief measures unleashed over the past month to help businesses and households cope with fallout from pandemic.
2:33 p.m. ET: Crude oil settles below $13 per barrel
U.S. West Texas intermediate crude oil futures settled lower by 24.6% to $12.78 per barrel on Monday, snapping a four-session winning stream from last week.
Brent crude oil traded nearly 8% lower to $19.76 per barrel as of 2:27 p.m. ET.
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12:40 p.m. ET: Stocks add to gains, led by big banks
Stocks extended gains during intraday trading Monday as the Financials sector outperformed. JPMorgan (JPM) led advances in the Dow.
Here were the main moves in markets, as of 12:42 p.m. ET:
S&P 500 (^GSPC): +39.67 points (+1.4%) to 2,876.41
10:54 a.m. ET: Hasty reopen is ‘the biggest risk’ to the rally
Stocks are at session highs, with the Nasdaq (^IXIC) perched at its highest levels in nearly 2 months, and the Dow (^DJI) trading above its 50-day moving average for the first time since February 21, just before the coronavirus panic selling dragged Wall Street into a bear market.
With some states and cities going their own way in terms of a reopening strategy, analysts are increasingly focused on two related elements of the COVID-19 crisis: A reopening that comes too soon, and the possibility of a second wave.
The timing of the latter is still very much up for debate, but Wall Street is continuously mulling the former. According to Marc Chaikin of Chaikin Analytics, a quantitative investment research firm based in Philadelphia, restarting activity too soon is the “biggest risk” to the market, and could require an “abrupt reversal” of limited reopening strategies:
There are so many things that can go wrong in the next six months that I continue to believe that investors should maintain sufficient cash levels to emotionally withstand whatever unfolds in the economy and the stock market. While we may or may not break the March 23rd lows in the stock market, history suggests that bear markets end with a whimper and not a bang.
Chaikin also sees more upside in some of the pandemic’s biggest winners, like Amazon (AMZN), Microsoft (MSFT) and Netflix (NFLX).
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10:30 a.m. ET: Dallas Fed manufacturing index extends declines in April, hitting fresh record low
The Dallas Fed’s production index, a closely watched measure of manufacturing conditions, deepened its declines to -55.3 from -35.3, “suggesting the contraction output has steepened since last month,” it said in a statement. Subindices measuring labor conditions pointed to further employment declines and shorter workweeks in April, the regional Fed said.
“Expectations regarding future business conditions remained negative in April. The indexes of future general business activity and future company outlook came in at -42.1 and -41.5, respectively, holding within a few points of their March readings,” the Dallas Fed said. “Other indexes for future manufacturing activity inched up but remained in negative territory.”
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9:31 a.m. ET: Stocks open higher
Here were the main moves in markets, as of 9:32 a.m. ET:
S&P 500 (^GSPC): +21.22 points (+0.75%) to 2,857.96
9:17 a.m. ET: U.S. crude oil extends declines, sliding more than 26%
U.S. West Texas intermediate crude oil futures (CL=F) slid nearly 27% to $12.39 per barrel as of 9:17 a.m. ET Monday, extending losses from earlier during the session. The commodity was on track to snap four straight prior sessions of gains.
Storage concerns remain top of mind for investors, with numerous reports underscoring the fast-filling capacity at Cushing, Oklahoma, the delivery point for WTI. Global storage has also become increasingly strained – Bloomberg reported Monday that South Korea became the fourth Asian nation to exhaust commercial storage space for crude oil.
Brent crude (BZ=F) prices fell 7.23% to $19.89 per barrel.
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7:05 a.m. ET Monday: Stock futures trade higher
Here were the main moves in markets, as of 7:05 a.m. ET:
S&P 500 futures (ES=F): up 25.75 points, or 0.91% to 2,855.25
Dow futures (YM=F): up 230 points, or 0.97% to 23,888.00
Nasdaq futures (NQ=F): up 97.5 points, or 1.11% to 8,866.5
