Hi Everyone,
The stock market closed deep in the red today, as despite the agreement on yet another stimulus package in Washington, investors remained downbeat regarding the global economy. The Dow was down 632 or 2.7%, to 23,019, the Nasdaq lost 298, or 3.5%, to 8,263, while the S&P 500 fell by 87, or 3.1%, to 2,737. Decliners outnumbered advancing issues decliners by a 4-to-1 ratio on the NYSE, where volume moderately heavy.
Traders said that all asset classes confirmed today’s global risk-off shift, as the bloodbath in the oil market remained the center of attention. As one trader explained, “Treasury yields declined, credit spreads widened, and basically all risk assets took a hit today amid the unprecedented moves in oil markets, and while the global COVID-19 crisis is easing, caution is still warranted for bulls.”
Netflix (NFLX, -0.8%) reported earnings after the bell today, and the company reported impressive numbers, boosted by the increased global demand. The company added more than 15 million new subscribers in the first quarter, and the stock jumped to a new all-time in volatile after-hours trading. Coca-Cola (KO, -2.5%), Lockheed Martin (LMT, -2.5%), Texas Instrument (TXN, -4.2%), and Philip Morris (PM, -6%) all beat the consensus estimates on their bottom lines as well, but since the outlook for the rest of the year is uncertain, all of the stocks closed the session with losses in the wake of their bullish reports.
The price of oil for June delivery plunged by over 40% today following yesterday’s wild moves into negative territory in some of the key oil contracts. Although the crude oil market normalized somewhat in late trading, the short-term pain is unlikely to be over for oil bulls. The market is likely to remain extremely oversupplied for at least a month, despite the historic production cut by OPEC and Russia. The price of further futures contracts could turn negative in the coming weeks, as storage capacities are quickly declining.
The European banking sector continues to be under severe selling pressure, and credit markets across the globe showed signs of stress today amid the oil collapse. While Thursday’s meeting between the leaders of the European Union (EU) might see a breakthrough, periphery government bonds sold off today, despite the European Central Bank’s (ECB) open-market interventions. Several key banks are also trading near their all-time or decade-long lows, and the weakness among U.S. banks is likely, in part, the direct consequence of the dire European situation.
As always, have a great evening, stay calm, stay home, stay healthy, do your part to flatten the curve and stay tuned!!!
Joe
