Tuesday April 14th

14-04-2020

Dow futures point to 400-point jump as virus outlook improves

U.S. stock index futures jumped in early morning trading Tuesday as investors grew more optimistic about the coronavirus outlook while bracing for the start of the corporate earnings season. At 8:30 a.m. ET, futures on the Dow Jones Industrial Average were up 367 points, pointing to an opening gain of about 400 points. S&P 500 futures pointed to a gain of about 1.5% while Nasdaq futures implied an opening rally of nearly 2%. “When you look at the facts, I think there’s reason to be more hopeful than we have been,” CNBC’s Jim Cramer said. “The worst-case scenario’s been taken off the table, and if Apple and Google can do contact tracing that we all embrace ... while we continue to roll out more testing, the economy could reopen a lot sooner than we thought even, say, three weeks ago.” President Donald Trump said in a press conference Monday that growth in new coronavirus infections stabilized, providing “clear evidence” that mitigation is working in the country. New York Gov. Andrew Cuomo struck an optimistic tone about the outbreak in his state, the epicenter of the pandemic in the United States. He said Monday it appears that “the worst is over ... if we continue to be smart going forward.” At least 10,000 people have died from the infection in the state. “Financial markets have started to take a more positive view of the outlook,” said Jan Hatzius, chief economist at Goldman Sachs, in a note. “The initial improvement was mostly policy-driven, but the greater optimism of the past week seems to be at least partly related to the virus itself. ” “To be clear, the health situation remains very bad in absolute terms, especially in the US which is now ahead of Italy and Spain in terms of coronavirus-related fatalities (though still much lower on a per-capita basis).” The number of coronavirus cases continues to rise globally. Data from Johns Hopkins University shows there are more than 1.9 million cases around the world, with over 582,000 in the U.S. The corporate earnings season kicked off on Tuesday with JPMorgan Chase and Johnson and Johnson reporting their latest quarterly results, giving investors their first look at how devastating the hit to corporations has been from the pandemic. JPMorgan Chase reported a big profit decline for the first quarter, but the stock rose 0.5% in the premarket on record markets revenue. Johnson & Jonson shares gained nearly 3% on better-than-expected earnings. Analysts expect S&P 500 earnings growth to decline 10.2% in the first quarter year-over-year, according to Refinitiv. There is also an unusually wide range of estimates given the unprecedented uncertainty from the coronavirus. Wells Fargo, meanwhile, reported first-quarter profits well short of expectations as the San Francisco-based bank set aside cash for credit losses amid the coronavirus pandemic. It reported earnings of 1 cent per share, below analyst estimates of 33 cents per share. “Even the lowered forecast may prove optimistic given some analysts have not adjusted numbers since mid-March in response to the lockdowns in many major cities throughout the country,” said Jeff Buchbinder, equity strategist for LPL Financial. For the first quarter, 88 negative earnings pre-announcements have been issued by S&P 500 corporations, according to Refinitiv. A wave of major companies have already withdrawn their full-year guidance. Stocks in Asia rose on Tuesday as Chinese exports for March fell less-than-expected. In Japan, the Nikkei 225 jumped 3.13% to close at 19,638.81 while the Topix index gained 1.96% to end its trading day at 1,433.51. Mainland Chinese stocks also closed higher, with the Shanghai composite up 1.59% to around 2,827.28 while the Shenzhen composite gained 2.223% to approximately 1,745.42. Hong Kong’s Hang Seng index advanced 0.65%. Elsewhere, South Korea’s Kospi advanced 1.72% to close at 1,857.08. Oil prices edged lower on Tuesday, with investors apparently unconvinced that record supply cuts could soon balance markets pummeled by the coronavirus pandemic, though a predicted plunge in U.S. shale output provided some support. Brent futures fell 8 cents, or 0.3%, to $31.66 a barrel by 1045 GMT after settling 0.8% up on Monday. U.S. West Texas Intermediate (WTI) crude was down 36 cents, or 1.6%, at $22.05, having dropped 1.5% in the previous session. Gold prices rose to their highest in more than seven years on Tuesday as concerns over global economic growth and a wave of fiscal and monetary measures from major central banks lifted bullion’s appeal. Spot gold was up 0.3% to $1,719.84 per ounce, having touched its highest since Nov. 2012. U.S. gold futures rose 0.2% to $1,764.20.