Sour-Tasting Economic & Earnings Reports Pressure Markets Today

The big story today that shared the limelight with the growth of the coronavirus pandemic (now over 2.2M worldwide cases), was the sour-tasting and significant US economic reports & earnings reports that combined to place significant pressure on the markets. The economic reports came in is as follows:

• The retail sales report confirmed a decrease of -8.7% month/month in March. When you excluding autos from the calculation we see that sales decreased by -4.5%
• The industrial production report confirmed a decrease of -5.4% month/month in March while total capacity utilization was 72.7% 
• The New York Fed’s Empire State Manufacturing Survey dropped 57 points to -78.2 
• The NAHB Housing Market Index for April fell to 30 (it was 72 in March)
• Business inventories dropped by -.4% in February
• The Mortgage Bankers Applications Index rose +7.3% wk/wk

In reaction, overall the markets dropped across the board today. The S&P 500 closed down by -2.2% with all eleven sectors ending in the red. The energy sector led all sectors declining -4.7% as it plagued by declining oil prices which dropped today $19.95/bbl down -1.3% as the EIA came out with projections of a 9.2 mb/d decrease in demand for oil in 2020. Chevron (CVX) closed at $82.49/share down -2.51% and Exxon (XOM) closed at $40.48/share down -4.60% & Occidental Petroleum Corporation (OXY) closed at $13.61/share down by a whopping -8.66%. The Dow lost -1.86% even with UnitedHealth Group (UNH) beating earnings expectations and closing at $281.68 up +4.1%. The Nasdaq declined -1.44% & the Russell 2000 was lost -4.31.% as riskier investments in smaller companies, in general, fell out of vogue again today.

A couple of bank stocks reported today and missed expectations and realized huge declines in revenue in Q1 as follows:  Bank of America (BAC) closed at $22.19/share down by -6.5% & Citigroup (C) closed at $42.86/share down by -5.6% & Goldman Sachs (GS) closed at $178.52/share up by +.16%.

FAANG stocks’ results were a bit mixed today. Amazon (AMZN) closed at $2,307.68/share, up by +1.07% after establishing a new 52-wk high of $2,333.37. Netflix (NFLX) jumped +3.19% closing $426.75/share as video-streaming demand continues to spike during the COVID-19 crisis. Rounding out the results, Facebook (FB) closed at $176.97/share, down by -.67%, Apple (AAPL) closed at $284.43/share falling by -.91%, & Alphabet (GOOG) closed at $1,262.47/share dropping by-.53%. 

The 2-yr US treasury yield dropped by 2 basis point to .20% & the 10-yr yield declined by 11 basis points to end at .64%. The U.S. Dollar Index strengthened by +.7% to 99.57.

Gold prices pulled back today closing at 1,733/oz & silver prices dropped today closing at $15.58/oz.

Here are a couple of stocks that were in focus today:

Shares of Peloton Interactive, Inc. (PTON), the exercise bike, and exercise company,  charged up +11.7% today to close at $35.61/share as many are speculating that our current COVID-19 stay at home lives & closed gym environment could be causing further adoption of their bikes and offers.

Shares of Slack Technologies, Inc. (WORK), the leading channel-based messaging platform, rose +10.7% to close at $28.03. The recent priced a $750M, .5% convertible note that is due 2025.

Economic Reports

On Monday, we did receive any significant economic reports.

On Tuesday, the Import and Export Prices for March report came in where import prices dropped -2.3% & export prices dropped -1.6% in March.

On Wednesday, we received the following reports: the retail sales report confirmed a decrease of -8.7% month/month in March. When you excluding autos from the calculation we see that sales decreased by -4.5%, the industrial production report confirmed a decrease of -5.4% month/month in March while total capacity utilization was 72.7%, the New York Fed’s Empire State Manufacturing Survey dropped 57 points to -78.2, the NAHB Housing Market Index for April fell to 30 (it was 72 in March), business inventories dropped by -.4% in February & the Mortgage Bankers Applications Index rose +7.3% wk/wk.

Investing & Inspiration

“I believe the returns on investment in the poor are just as exciting as successes achieved in the business arena, and they are even more meaningful!” -Bill Gates

“Every portfolio benefits from bonds; they provide a cushion when the stock market hits a rough patch. But avoiding stocks completely could mean your investment won’t grow any faster than the rate of inflation.” – Suze Orman

“The tax on capital gains directly affects investment decisions, the mobility, and flow of risk capital… the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.” – John F. Kennedy

“If all the economists were laid end to end, they’d never reach a conclusion.
-George Bernard Shaw

“The riskiest thing we can do is just maintain the status quo.
I get up at 4:30 in the morning, seven days a week, no matter where I am in the world. I think it is important for people who are given leadership roles to assume that role immediately. What I’ve really learned over time is that optimism is a very, very important part of leadership.” Bob Iger, Ceo of Disney

“There are old traders and there are bold traders, but there are very few old, bold traders.”-Ed Seykota

“Let this scenario play out on its own, in its own fashion. As you watch it unfold, you will soon be grateful that you choose the peaceful path. Remember — those who live by the sword, die by the sword.”

“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game.” -Jim Cramer

“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

“Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” -Bruce Kovner

“The policy of being too cautious is the greatest risk of all.” -Jawaharlal Nehru

“The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company’s fundamentals are significantly more or less favorable than the current financial-community appraisal of that stock.” -Philip Fisher

“I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.” -Richard Dennis

“The four most dangerous words in investing are: ‘this time it’s different.” -Sir John Templeton

“Money doesn’t make you happy. I now have $50 million but I was just as happy when I had $48 million.” -Arnold Schwarzenegger

Tomorrow

Tomorrow’s significant economic data report schedule will include the following:

• The weekly Initial and Continuing Claims
• The Housing Starts and Building Permits for March
• The Philadelphia Fed Index for April