The S&P and Dow are poised to end the week on a down note following a bigger than expected drop in payrolls, although that data is expected to continue to get worse before it gets better. There have also been issues with the rollout of the small business lending program that the federal government is rolling out as a lifeline to companies being crushed by COVID-19 related closures and restrictions.
ECONOMIC EVENTS: In U.S. data, nonfarm payrolls dropped by a much larger than anticipated 701,000 in March, abruptly ending a nine and a half year run of employment gains. The unemployment rate jumped to 4.4% from 3.5%. Markit services index was revised up to 39.8 in the final March print versus the 39.1 preliminary reading, though it's down -9.6 points from the 49.4 in February. ISM non-manufacturing index fell by a smaller than expected 4.8 points to 52.5 in March, holding up surprisingly well.
Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now 1,041,126 confirmed cases of COVID-19 and 55,781 deaths due to the disease.
In New York, which has become the "epicenter" of the outbreak in the U.S., Governor Andrew Cuomo said 102,863 people have tested positive, which represents 10,482 new cases.
TOP NEWS: Shares of 3M (MMM) were 3% lower near noon after President Donald Trump tweeted last night that the government "hit 3M hard" and that the company "will have a big price to pay" over "what they were doing with their Masks." In response to the announcements issued by the White House last evening, 3M said that the administration requested the company cease exporting respirators made in the U.S. to the Canadian and Latin American markets, noting that ceasing all export of respirators produced in the U.S. would likely cause other countries to retaliate and do the same, meaning that the net number of respirators being made available to the U.S. would actually decrease. Yesterday, the Administration formally invoked the Defense Production Act, or DPA, to require 3M to prioritize orders from the Federal Emergency Management Agency, or FEMA, for its N95 respirators and the company said it has "been working closely with the Administration to do exactly that." In an interview on CNBC, 3M CEO Mike Roman called it "absurd" to think his company is not doing all it can.
Tesla (TSLA) shares are up 7% after the car maker said it produced almost 103,000 vehicles and delivered approximately 88,400 vehicles in the first quarter for its "best ever Q1 performance." Model Y production started in January and deliveries began in March, significantly ahead of schedule, the company added.
Bed Bath & Beyond (BBBY) reported last night that it has extended the closure of its retail stores and intends to furough the majority of its store associates until at least May 2, joining a great number of other retailers who have made similar announcements.
Big banks are in focus as the U.S.' small business lending program for businesses affected by COVID-19 launches today, though not without some concerns. CNBC said last night that none of the participating banks the network interviewed were sure they'd be ready to dole out at least $350B in loans to small businesses, saying they were awaiting key guidance from the Small Business Administration on just how to administer the program. In particular, JPMorgan (JPM) told customers this week that the bank "will most likely not be able to start accepting applications on Friday, April 3rd as we had hoped." In response, U.S. Treasury Secretary Steven Mnuchin said during a press conference that the lending program would be "up and running" on Friday, and Bloomberg later reported that the SBA had increased to 1% the interest rate lenders may charges small businesses under the program after lenders complained that the previous rate of 0.5% was lower than even their own cost of funds. Though Bank of America (BAC) said it is now able to accept online applications for the U.S. government's $350B small business relief program, other big U.S. banks, namely JPMorgan, Wells Fargo (WFC), and Citi (C), have not yet been able to accept applications for the program, CNBC stated in a midday update.
MAJOR MOVERS: Among the noteworthy gainers was Fate Therapeutics (FATE), which rose 11% after announcing a global collaboration and option agreement with Janssen Biotech (JNJ) under which Janssen will contribute proprietary antigen binding domains for up to four tumor-associated antigen targets. Also higher was Incyte (INCY), which gained 2% after announcing phase 3 study of Jakafi for COVID-19.
Among the notable losers was Macquarie Infrastructure (MIC), which dropped 26% after it withdrew its guidance, suspended its dividend, and said it is continuing to pursue strategic alternatives. Also lower were Aehr Test Systems (AEHR) and Chewy (CHWY), which fell 16% and 4%, respectively, after reporting quarterly results.
INDEXES: Near midday, the Dow was down 434.59, or 2.03%, to 20,978.85, the Nasdaq was down 141.30, or 1.89%, to 7,346.01, and the S&P 500 was down 50.11, or 1.98%, to 2,476.79.
