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The Market Sum | Insight after the bell

By Caleb Silver, Editor in Chief

Thursday's Headlines

1. US markets post small gains as tech leads again

2. Weekly jobless claims top 5.2 million

3. Consumer staples thrive as we stay and eat at home

4. These stocks are making all-time highs

Markets Closed

Dow
23,537.68
+33.33 (+0.14%)

S&P
2,799.55
+16.19 (+0.58%)

Nasdaq
8,532.36
+139.19 (+1.66%)

VIX
40.11
−0.73 (-1.79%)

Bitcoin
$7,030.62
+$422.30 (+6.39%)

US 10-Yr Yield
0.609
−0.029 (-4.55%)

image: Tetra Images/Getty

Markets Today

Investors shrugged off U.S. weekly jobless claims today, sending markets to small gains—except for tech stocks, which continue to outperform the broader market. Those weekly claims showed that 5.24 million Americans filed for unemployment last week. That news was expected, and while historically high, the numbers did fall from last week, which could signal a peak in new weekly claims.

There have been multiple reports that the U.S. Small Business Administration is running up against its $349 billion lending limit on Thursday and is now out of money as U.S. lawmakers debate another stimulus package. The SBA website reads that it is "unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time."

There have also been reports of glitches in the stimulus grant program to individuals and households. Many people have already received their grants via direct deposit, but millions more are still waiting to either apply for theirs, or receive them. That is likely to lead to a lot of frustration, especially since states like New York just extended the social distancing guidelines until mid-May.

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Headlines:

The federal government's massive stimulus efforts to soften the blow from the coronavirus is forecast to swell the U.S. federal budget deficit by $1.6 trillion during this fiscal year, the Congressional Budget Office said Thursday. While the CBO didn't give updated projections for the deficit in the 12 months through September, Bloomberg calculates the new gap would likely be equivalent to more than 10% of gross domestic product. That would make it the biggest by that measure since World War II as well as a record in dollar terms.

U.S. home-building activity collapsed in March as the coronavirus spread, with housing starts tumbling 22.3% from a month ago. The Commerce Department said Thursday that groundbreakings occurred last month at a seasonally adjusted annual rate of 1.2 million units, down from a 1.56 million pace in February. Construction of single-family houses fell 17.5%, while apartment and condo starts were off 32.1% from a month ago.

Morgan Stanley reported EPS of $1.01 a share on revenue of $9.5 billion for the first quarter. Both were below expectations. Sales and Trading net revenues were up 30% from a year ago. "Over the past two months, we have witnessed more market volatility, uncertainty and anxiety as a result of the devastating COVID-19 than at any time since the financial crisis," said Chairman and CEO James P. Gorman.
DraftKings received SEC approval yesterday to go public via a reverse merger with blank-check acquisition company Diamond Eagle, which will also include the roll-in of sports betting infrastructure platform SBTech.
Bed, Bath & Beyond (BBBY) shares are up 16% in pre-market trading after plunging 17% yesterday. The company surprised with a fiscal fourth quarter earnings and revenue beat. It also warned that first quarter and full-year 2020 results will be unfavorably impacted by the COVID-19 pandemic.
Costco has increased its dividend from 65 to 70 cents per share. The dividend is payable May 15th, 2020, to shareholders of record at the close of business on May 1st, 2020.
Abbott Laboratories announced its third COVID-19 test, which will detect antibodies and identify if a person has had the infection. It will ship a total of 4 million tests for April.
WWE is letting go several star performers in a bid to reduce costs amid the COVID-19 crisis. The media organization says it's also reducing executive and board member compensation, decreasing operating expenses, and deferring spending on the new headquarters for at least six months. Florida deemed it an "essential business," and it is allowed to air live shows on TV.
Apple unveiled the new iPhone SE yesterday, its first "affordable" smartphone in four years with the starting price of $399. It has a 4.7-inch Retina HD display, a Home button with Touch ID, a A13 Bionic chip, and a 12-megapixel f/1.8 aperture Wide camera. The company's 5G phones are expected later this year.
Houseparty saw 50 million sign ups in the past month, according to CEO Sima Sistani. The social networking app that allows users to video chat and play online games with friends was acquired by Epic Games, the creator of Fortnite, in June 2019 and has seen a massive surge in popularity since lockdown measures were put in place across the world.

Have Jobless Claims Peaked?

5.25 million Americans filed for unemployment in the past week, according to the U.S. Labor Dept., bringing the three-week total to nearly 22 million people who have lost their jobs amid the global pandemic. That wiped out nearly all the job gains since the Great Financial Crisis. The one sliver of good news is that these new unemployment claims were lower than last week's, which were revised higher by 9,000 people.

The seasonally adjusted insured unemployment rate was 8.2% for the week ending April 4th, which marks the highest level of the seasonally adjusted insured unemployment rate in the history of the Labor Dept.'s data. The previous high was 7% in May of 1975. Many economists predict that unemployment has peaked, but we are right in the middle of this economic shutdown, so it's impossible to know.

While weekly claims have taken on a new importance given the economic shutdown, we have to start focusing on continuing claims, which capture individuals already covered by unemployment insurance and currently receiving benefits. The hope is that employers will hire back employees once the crisis has abated and the economy starts growing again. That will depend on whether those companies are still in business anymore and if there is sufficient demand to add workers.

chart courtesy BofA

What Are We Eating?

Consumer staples have been one of the stronger sectors of a weak market over the past several months. The sector is down 6%, while the S&P 500 is down around 14%, year-to-date. As we mentioned yesterday, food and drinks have been one of the only areas in retail that grew in March, popping 28%, as we stay home, cook, and eat like it's our job.

Bank of America's research team calculated the weekly sales growth for the various companies it follows in the consumer staples sector (see chart above). We are eating a lot of soup, cereal, chocolate, and ketchup, these days.

What Are We Drinking?

A lot of soda, apparently. Coffee prices were up 15% in March, and beer sales have remained strong. Yes, even Corona beer sales are strong. What's not strong are energy drinks as brands like Rockstar and Monster Beverage have actually seen sales declines.

These Stocks Are Making 52-week Highs

Amazon and Netflix continue to make all-time highs, but this batch, below, paints yet another picture of how our lives have changed in two months. Eli Lilly (LLY) and Abbott Labs (ABT), which are both working on treatments for COVID-19, hit all-time highs today. So did Peloton, the at-home exercise platform, as sales have grown since the lockdown. And then there's Chewy (CHWY), the ecommerce pet care company. Shares are up 62% in the past year as our pets are proving to be among the only winners in this crisis. They love having us home all the time, and we are apparently feeding them well.

chart courtesy YCharts

More News:

American Airlines Earnings: What to Look For

Airline Deal Takes Off As Planes Stay Grounded

Amazon Earnings: What to Look For

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Shares of Centene are up by 5.5% after the healthcare company announced a plan to support disabled individuals impacted by the ongoing pandemic. Activision Blizzard's stock price rose by almost 3.5% following the video game holding company's CEO, Bobby Kotick, reporting "record levels of engagement" with many of its products.

Yesterday we said Boeing shares declined 4% when they actually rose 3.5%. We were wrong, and we regret the error.

Shares of oil companies, such as ONEOK (3%) and Helmerich & Payne (1.5%), are down as the commodity continues to remain at its lowest level since 2002. Shopping mall operator Simon Property Group's stock price fell by over 9% once investors realized that malls aren't going to be reopening as soon as they expected.

Word of the Day

Continuing Claims

Continuing claims refers to unemployed workers that qualify for benefits under unemployment insurance. In order to be included in continuing claims, the person must have been covered by unemployment insurance and be currently receiving benefits. Data on unemployment claims is published by the Department of Labor on a weekly basis, allowing for frequent updates on the levels of unemployment.