U.S stock indexes closed higher on Friday but logged weekly losses as investors digested economic data, mixed corporate results, and the latest economic aid package from Congress to combat the COVID-19 pandemic.
How did benchmarks perform?
The Dow Jones Industrial Average US:DJIA ended up 260.01 points, or 1.1%, to 23,775.27. The S&P 500 index US:SPX added 38.94 points, or 1.4%, to close at 2,836.74, while the Nasdaq Composite Index US:COMP gained 139.77 points, or 1.7%, to finish at 8,634.52.
For the week, the Dow fell 1.9%, the S&P 500 declined 1.3% and the Nasdaq retreated 0.2%. The declines were the first losing week for the benchmarks of the past three weeks.
Meanwhile, the embattled small-cap Russell 2000 index US:RUT finished 1.6% higher on the session and booked a 0.3% weekly gain.
What drove the market?
Stocks ended a choppy week on a high note Friday as investors scooped up technology shares and picked over beleaguered financials—bullish signs after the week started with a historic fall in oil prices to unprecedented negative levels.
Tenuous signs of stability in the price of oil, have provided some support for equities, but doubts about the severity of the economic recession unfolding due to the COVID-19 pandemic leave investors worried about the durability of recent crude gains.
“Fridays tell us a lot about market sentiment,” wrote Steven Ricchiuto, U.S. chief economist at Mizuho Securities, in a client note. “When investors are worried about bad news coming over the weekend, when markets are closed, the Street is more comfortable being short than long,” he said.
“Alternatively, when markets are looking through to the longer-term, the weekend positioning matters less and what we see on Friday is the direction of sentiment,” he said.
Investors also were encouraged Friday by President Trump signing into law the much-awaited $484 billion coronavirus aid package that includes a second round of funding for small businesses under the Paycheck Protection Plan, or PPP.
The measure contains another $320 billion to help small businesses. It also has about $75 billion for hospitals, $25 billion for coronavirus testing and $60 billion for the Small Business Administration’s Economic Injury Disaster Loan program.
However, investors also saw countries report mixed success in curbing the coronavirus pandemic, while Trump’s public statements raised some questions about his leadership in the crisis.
In economic data, U.S. orders for durable goods slumped 14.4% in March, the latest bleak reading to reflect the drop in activity due to the COVID-19 pandemic, which in the U.S. has claimed more than 50,000 lives.
“Looking ahead, we expect the coronavirus will deal a severe blow to U.S. business spending via suppressed global and domestic demand, broken supply chains, depressed oil prices, tighter financial conditions and elevated uncertainty,” wrote Lydia Boussour, senior U.S. economist at Oxford Economics, in a note following the data report. “This will translate into some of the largest pullbacks in capital spending of all time.”
Meanwhile, a final reading on consumer sentiment from the University of Michigan for April came in at 71.8 from 89.1 in March.
Which stocks were in focus?
- American Express Co. US:AXP Shares of gained 0.9%, after the credit card and travel services company reported first-quarter profit that beat expectations, although revenue fell short.
- Verizon Communications Inc. US:VZ shares edged 0.6% higher after earnings beat but COVID-19 weighs on device sales.
- Intel Corp. US:INTC rose 0.4% after the chip maker revealed Thursday afternoon that earnings and revenue spiked well above expectations in the first quarter, but predicted that profit would come in lower than projections in the second quarter, Also Bloomberg reported that Apple Inc. US:AAPL would develop its own chips rather than use Intel processors by 2021.
- Freeport-McMoRan Inc. US:FCX said Friday it is revising the operating plans for 2020 that it made in January as it struggles with the impact of the coronavirus pandemic on its business. Shares climbed 8.6%.
- Boeing Co.’s US:BA 737 Max jet return is expected to be delayed until late summer or early fall, according to The Wall Street Journal. Share lost 6.4%
- J.C. Penney Co.’s stock US:JCP fell 11.3% after the Journal reported that it was in advanced talks for bankruptcy financing.
- AT&T Inc. shares US:T rose 0.7% after the company announced that longtime CEO Randall Stephenson would retire, with COO John Stankey eventually taking the helm.
- DraftKings Inc. US:DKNG shares surged 10.4% on their first day of trade on the Nasdaq for the online sports-betting company, after the stock initially surged 14% in early action Friday.
- Shares of Facebook Inc. US:FB jumped 2.7% on Friday after the social-media platform said it is launching a new video chat feature that appears to be a rival to Zoom Video Communications Inc. US:ZM and Microsoft Corp.’s US:MSFT Teams service. Zoom shares ended 6.1% lower and Microsoft shares rose 1.8% to end Friday.
How did other markets trade?
Oil futures booked a third gain in a row after their recent plunge, but ended down sharply for the week. West Texas Intermediate crude for June delivery US:CL gained 44 cents, or 2.7%, to settle at $16.94 a barrel, but the most-active contract notched a weekly drop of 32%, its worst weekly fall on record based on the most-active contract.
The U.S. dollar US:DXY was down 0.1% against a basket of currency trading partners, as measured by the U.S. Dollar Index.
Overnight in Asia, Japan’s Nikkei JP:NIK fell 0.9%. The Hong Kong Hang Seng HK:HSI closed about 0.6% lower, China’s Shanghai Composite Index CN:SHCOMP declined 1.1%, while the CSI 300 Index XX:000300 dropped 0.9%.