Stocks rally, and oil prices crawl up off the floor
Stocks rallied Wednesday, with the benchmark Standard & Poor’s 500 index clawing back a chunk of this week’s sharp losses as a bit of oxygen pumped through markets around the world.
Even oil gained ground, pulling further away from zero after earlier getting turned upside down amid a collapse in demand. Stocks rose from Seoul to Spain, and winners outnumbered losers in New York by more than two to one. Treasury yields also pushed higher, signaling a bit less pessimism among investors.
”This has been a tremendously good reminder that the stock market is a forward predictor,” said Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management.
Investors are still bracing for a severe, painfully deep recession after businesses worldwide shut down in hopes of slowing the spread of the coronavirus. But they had already sent U.S. stocks down by roughly one-third a month ago on that expectation. Now, even as dismal economic and health reports pile up, some investors are looking ahead to the prospect of parts of the economy reopening as infections level off in some areas.
“Right now, it’s about the economy beginning to open, even at the margins,” said Quincy Krosby, chief market strategist at Prudential Financial. “We’re watching Germany, the largest economy in Europe, begin to open. What this suggests is if things go well in these economies, we’re going to see more states begin to open, and perhaps open more broadly.”
Officials this week are making a bid with Gov. Gavin Newsom to begin a slow and gradual reopening process, one they say is guided by science.
The S&P 500 rose 62.75 points, or 2.3%, to 2,799.31, reducing its loss for the week to 2.6%.
The Dow Jones industrial average climbed 456.94 points, or 2%, to 23,475.82, and the Nasdaq composite advanced 232.15 points, or 2.8%, to 8,495.38.
Energy stocks notched some of the market’s biggest gains, riding the ripple of strengthening oil prices. Halliburton, Apache and Diamondback Energy all gained at least 9%. All three, though, are still down more than 60% for the year so far.
The price of a barrel of U.S. oil to be delivered in June jumped 19% to $13.78. It zigzagged in the morning, then turned higher after President Trump raised the possibility of a disruption to oil supplies by threatening the destruction of any Iranian gunboats that harass U.S. Navy ships.
The big gain, though, means it’s recovered just a fraction of its steep losses. It was close to $30 a barrel at the start of last week and nearly $60 at the beginning of the year. A collapse in demand for energy combined with continued production in countries around the world means too much oil is sloshing around, depressing its price.
Brent crude, the international standard, climbed 5.4% to $20.37 a barrel.
Other companies that have been hurt by the COVID-19 pandemic also rose after offering some slight hints of hope.
Chipotle Mexican Grill, for example rose 12.1% after it said a key sales figure plunged 16% in March on widespread stay-at-home orders. But that sales figure hit a bottom during the week of March 29, down 35%, and has since improved a bit, it said.
Stocks of companies that have been winners in the new stuck-at-home economy, meanwhile, are telling investors just how much they’ve been benefiting.
With people hunkered inside and craving communication, Snap said that the number of active users on Snapchat each day jumped 20% in the first quarter compared with a year earlier. Its revenue topped Wall Street’s expectations, and Snap shares jumped 36.7%.
Netflix has also been a big winner as people look to fill their time, with shares recently hitting a record. It added nearly 16 million global subscribers in the first three months of the year, but shares slipped 2.9% after its profits didn’t quite live up to Wall Street’s lofty expectations.
Toilet paper has also been hugely in demand; Kimberly-Clark, the maker of Cottonelle and Scott, said its sales benefited in the first three months of the year as customers stocked up on those products and Kleenex tissue, among other items. Its shares rose 2.4%. In an increasingly common move, Kimberly-Clark also retracted its financial forecasts for 2020 given how uncertain the global economy is because of the coronavirus outbreak.
Amid the coronavirus outbreak, consumers searching Amazon for toilet paper are finding that some sellers aren’t delivering as promised.
Late Tuesday, the Senate approved a $483-billion proposal to deliver more loans to small businesses and aid to hospitals. The House is expected to vote on it Thursday.
The new bill would come on top of more than $2 trillion in aid that Congress has already approved. That, plus massive support for markets from the Federal Reserve, has helped the S&P 500 rise 25% since a low in late March. The index has roughly halved its loss from its record set in February.
The yield on the 10-year Treasury rose to 0.61% from 0.57%. But it remains well below the 1.90% level where it started the year.
