Hi Everyone,
The stock market had its largest daily percentage loss in two weeks on Friday, as weak earnings reports from the energy sector coupled with Amazon’s (AMZN, -7%) profit warning led to a broad selloff on Wall Street. The Dow was down 622, or 2.6%, to 23,724, the Nasdaq lost 285, or 3.2%, to 8,605, while the S&P 500 fell by 82, or 2.8%, to 2,831. Decliners outnumbered advancing issues by a more than 10-to-1 ratio on the NYSE, where volume was moderate.
Traders said that Friday’s plunge wreaked havoc among cyclical issues, as investors dumped risk assets following a week of dismal economic releases. As one trader explained, “Amazon’s warning weighed heavily on stocks on Friday, but the real reason behind the broad selloff is the pronounced economic weakness, as even in light of the relatively strong ISM manufacturing PMI, the short-term outlook remains grim.”
The last week of April was as busy as it gets, as a slew of crucial corporate earnings reports, economic releases, and central bank meetings led to wild swings across asset classes. The Fed and the European Central Bank (ECB) ended up slightly disappointing investors since a lot of analysts were expecting further easing steps to support the global economy that suffered a huge shock due to the pandemic. Corporate earnings were relatively stable, especially in the all-important tech sector, but that was not enough to keep the broad rally alive, and the major indices sold off toward the end of the week. U.S. stocks are still relatively strong compared to global risk assets, with especially emerging markets showing signs of stress due to the COVID-19 crisis, which could mean volatility is here to stay in the coming weeks.
Even though the most valuable companies already reported earnings this week, we will still have companies worth trillions publishing their quarterly numbers next week including Disney (DIS), PayPal (PYPL), CVS Healthcare (CVS), Bristol-Meyers (BMI), Raytheon (RTX), and T-Mobile (TMUS). As for economic releases, we will have another busy week, with all eyes on Friday’s government jobs report. Before that, factory orders will be released on Monday, the ISM non-manufacturing PMI will highlight Tuesday’s session, the ADP payrolls number is scheduled for Wednesday, while the Challenger job cuts estimate and the weekly number of new jobless claims will be released on Thursday. Besides the economic numbers, investors will keep a close eye on the number of new COVID-19 cases in the states and countries that are starting to ease their lockdown measures. Hopefully, we will not see a spike in infections.
As always, have a great evening, stay calm, stay home, stay healthy, do your part to flatten the curve and stay tuned!!!
Joe
