The S&P and Dow are giving up some of their monthly gains as April comes to a close, which may be a sign of profit-taking following an incredibly strong rebound in markets this month. A larger than expected jump in jobless claims may also be a culprit for the pullback, though central banks at home and abroad are continuing to announce more stimulus measures to try to support the global economy as the pandemic wears on.
ECONOMIC EVENTS: In U.S. data, initial jobless claims fell 603,000 to 3.84M in the week ended April 25. The Chicago manufacturing PMI for April tumbled another 12.4 points to 35.4.
In central bank news, the Federal Reserve Board announced it is expanding the scope and eligibility for the Main Street Lending Program. Meanwhile, the ECB kept the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged, but announced other forms of aid. The Governing Council decided to reduce the interest rate on the targeted longer-term refinancing operations during the period from June 2020 to June 2021 to 50 basis points below the average interest rate on the Eurosystem’s main refinancing operations prevailing over the same period. Additionally, a new series of non-targeted pandemic emergency longer-term refinancing operations, or "PELTROs," will be conducted to support liquidity conditions in the euro area financial system
TOP NEWS: Shares of Facebook (FB) have gained 5% as a number of Wall Street analysts describe the company's first quarter report as significantly better than anticipated. Facebook reported a significant slowdown in advertiser demand in the last three weeks of Q1, but the initial weakness exhibited in late March seems to have stabilized a bit as advertising revenue is trending flat year-over-year to start Q2.
Shares of Microsoft (MSFT) are not showing the same strength as Facebook and are flat near noon, although the tech giant similarly reported better than expected results. Of note, Microsoft said COVID-19 had "minimal net impact" on total company revenue in the third quarter of fiscal year 2020, with CEO Satya Nadella adding that we have seen "two years' worth of digital transformation in two months" due to the pandemic.
Credit Suisse analyst Dan Levy was among those on Wall Street who raised the firm's price target on Tesla (TSLA) following the company's "gross margin fueled beat" in Q1. In addition to "providing us with an interesting call," Elon Musk expressed confidence in 40% compound annual growth over the next 5-10 years and said capacity expansion plans are intact, leaving the central long-term narrative intact, Levy said. His reference to the "interesting call" is most likely an allusion to the fact that the car maker's CEO used a curse word when ranting about his frustration regarding ongoing shelter-in-place and non-essential business orders.
Twitter (TWTR) shares initially jumped in pre-market trading after the company's adjusted earnings, revenue and monetizable daily active user growth beat forecasts. In its shareholder letter, Twitter said the quarter was "best seen as two distinct periods." January through early March "largely performed as expected, with strength in the US and some COVID-19 related weakness in Asia," said Twitter, adding that "from March 11 until March 31, our total advertising revenue declined approximately 27% year over year." Near noon, Twitter shares are down 7%
Shares of McDonald's (MCD) are down 2% at midday after the restaurant giant reported that its global comparable sales declined 3.4% in the first quarter. McDonald's began 2020 with "exceptional global momentum," said President and CEO Chris Kempczinski, who added that "the global crisis caused by the COVID-19 pandemic has significantly disrupted our business, and we continue to operate in a very challenging and unpredictable environment."
MAJOR MOVERS: Among the noteworthy gainers was Energy Transfer (ET), which rose 5% after Blackstone (BX) reported a 6.9% passive stake in the company. Also higher were Kraton (KRA) and Matador (MTDR), which gained a respective 27% and 26% after reporting quarterly results.
Among the notable losers was Royal Dutch Shell (RDS.A), which slid 12% after the company reported lower than expected quarterly earnings and slashed its dividend for the first time since World War II. Also lower after reporting quarterly results were Olin (OLN), Goodyear Tire (GT), and Comcast (CMCSA), which fell 18%, 13%, and 5%, respectively.
INDEXES: Near midday, the Dow was down 402.18, or 1.63%, to 24,231.68, the Nasdaq was down 76.57, or 0.86%, to 8,838.14, and the S&P 500 was down 42.72, or 1.45%, to 2,896.79.
