S&P 500, Dow slip on grim earnings, coronavirus worries

(Reuters) – The S&P 500 and Dow Jones slipped on Thursday, giving up early gains as concerns about rough first-quarter earnings and lasting economic damage from the coronavirus pandemic offset weekly jobless claims that were better than some had feared.

A 6.2% fall for Boeing Co (BA.N) sent the blue-chip Dow .DJI down 1%, as its European rival Airbus (AIR.PA) said it was examining requests to defer deliveries after a collapse in travel demand.

The Nasdaq .IXIC outperformed the broader market with Amazon.com Inc (AMZN.O) and Netflix Inc (NFLX.O) surging to record highs as sweeping stay-at-home orders drove demand for online streaming services, household essentials, groceries and cloud computing.

Meanwhile, the shutdown in New York was extended until May 15 even as coronavirus-related hospitalizations and deaths fell to their lowest in more than a week and added to evidence that the hardest-hit state was controlling its spread.

Wall Street has swung this week between hopes of a peaking in coronavirus cases and fears of the biggest economic slump since the Great Depression, as the lockdown measures crushed business activity.

Latest data showed jobless claims fell slightly to 5.2 million last week from an upwardly revised 6.62 million the week before, but the total figure for the past month still topped a stunning 20 million.

Economists polled by Reuters had estimated 5.1 million jobless claims for the week ended April 11.

Wall Street’s fear gauge rose for the second straight session, while the flight from risk pressured U.S. Treasury yields. [US/]

“We are still struggling to grab a foothold on the deterioration of what’s going on,” said Andrew Smith, chief investment officer at Delos Capital Advisors in Dallas.

“The jobless claims number is better than what economists expected, but it’s still a little too soon to be extrapolating to the ‘all clear ahead’ road.”

After a 27.5% rally from its March lows, the S&P 500 index is still 17.5% below its record high as first-quarter earnings kicked off with U.S. banks preparing for a wave of future loan defaults following a halt in business activity.

Analysts estimate earnings for S&P 500 companies slumped 12.8% in the first quarter, with U.S. economic growth expected to have contracted at its fastest pace since World War Two.

Graphic – S&P 500: coronacrisis vs financial crisis: here

Trump is now expected to announce “new guidelines” for re-opening the economy at a news conference on Thursday.

“What the market cannot price in perfectly is when the economy re-opens, what its nuances will look like and what its impact will be on corporate profits one quarter, two quarters and a year away,” said David Bahnsen, chief investment officer at Bahnsen Group in Newport Beach, California.

Morgan Stanley (MS.N) wrapped up earnings for the big U.S. lenders, reporting a plunge in quarterly profit as its advisory and wealth management businesses took a hit from the economic fallout of the pandemic. The bank subsector .SPXBK dropped 3.9%.

At 12:36 p.m. ET, the Dow Jones Industrial Average .DJI was down 276.05 points, or 1.17%, at 23,228.30, and the S&P 500 .SPX was down 17.63 points, or 0.63%, at 2,765.73. The Nasdaq Composite .IXIC was up 4.71 points, or 0.06%, at 8,397.88.

The Philadelphia chip index .SOX rose 2.1% after the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW) reported a near doubling in first-quarter net profit.

However, United Airlines Holdings Inc (UAL.O) slipped 9.9% as the carrier said it cut its flight schedule by 90% for May and warned travel demand now “essentially at zero shows no sign of improving in the near term”.

Declining issues outnumbered advancers more than 2-to-1 on the NYSE and on the Nasdaq.

The S&P index recorded 14 new 52-week highs and one new low, while the Nasdaq recorded 40 new highs and 50 new lows.

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