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End of Day Briefing - Friday May 8, 2020

Stocks rally to end week, as investors see silver lining in jobs report

Dow +455.43 at 24331.32, Nasdaq +141.66 at 9121.34, S&P +48.61 at 2929.80

[BRIEFING.COM] U.S. stocks extended weekly gains on Friday, as the market saw reasons to stay positive on the economic outlook despite the dismal employment report for April. The S&P 500 (+1.7%), Dow Jones Industrial Average (+1.9%), and Nasdaq Composite (+1.6%) advanced more than 1.5%, while the Russell 2000 rose 3.6%.

The gains were broad, with all 11 S&P 500 sectors and all 30 Dow components closing in positive territory. Relative strength was found in the S&P 500 energy (+4.3%), industrials (+2.5%), materials (+2.4%), and consumer staples (+2.3%) sectors, while stocks in the health care sector (+0.5%) underperformed.

In April, nonfarm payrolls declined by 20.5 million ( consensus -21.00 million), and the unemployment rate increased to 14.7% ( consensus 16.2%). Those were the worst readings in the post-World War II era, but the number of unemployed persons said to be on "temporary layoff" increased about ten-fold to 18.1 million in April.

The latter is noteworthy because its shows that most workers who were recently laid off are optimistic in being reemployed. That sentiment would be consistent with 1) the market's view that the jobs data can't get any worse and 2) news that more companies are restarting operations as states move along with their reopening plans.

Apple ($AAPL 310.13, +7.21, +2.4%) plans to reopen stores in several U.S. states next week. Boeing ($BA 133.44, +4.79, +3.7%) plans to reopen its 737 MAX factory later this month. Uber ($UBER 32.79, +1.86, +6.0%) observed ride-sharing growth over the past three weeks, and tickets to Walt Disney's ($DIS 109.16, +3.59, +3.4%) Shanghai theme park sold out within minutes.

Separately, U.S.-China tensions appeared to simmer today after the two sides reportedly pledged to make progress on their Phase One trade deal.

U.S. Treasuries retreated throughout the day and closed near their session lows. The 2-yr yield increased three basis points to 0.14%, and the 10-yr yield increased five basis points to 0.68%. The U.S. Dollar Index declined 0.1% to 99.78. WTI crude futures rose 4.5%, or $1.06, to $24.71/BBL.

Reviewing Friday's economic data:

  • April nonfarm payrolls declined by 20.5 million ( consensus -21.00 million). April private sector payrolls declined by 19.52 million ( consensus -21.30 million). April unemployment rate was 14.7% ( consensus 16.2%), versus 4.4% in March. April average hourly earnings were up 4.7% ( consensus +0.4%) after increasing an upwardly revised 0.5% (from 0.4%) in March.
    • The key takeaway from the report is that there is a lot more to it than meets the headline eye, most of which speaks to the depth of the country's economic problems and the challenges in bouncing back from them in rapid-fire fashion.
  • Wholesale inventories declined 0.8% in March ( consensus -1.0%) after declining 0.7% in February.

Investors will not receive any notable economic data on Monday.

  • Nasdaq Composite +1.7% YTD
  • S&P 500 -9.3% YTD
  • Dow Jones Industrial Average -14.7% YTD
  • Russell 2000 -20.3% YTD

Market Snapshot

SP 5002929.80+48.61(1.69%)
10-yr Note -25/320.681
NYSEAdv 2455 Dec 468 Vol 908.7 mln
NasdaqAdv 2459 Dec 792 Vol 3.7 bln

Industry Watch

Strong: Energy, Financials, Materials
Weak: Information Technology, Health Care

Moving the Market

-- Stocks extend gains despite dismal employment report for April

-- Nonfarm payrolls decline by 20.5 million ( consensus -21.0 million), unemployment rate increased to 14.7%

-- Reopening narrative still in play

ECONOMIC EVENTS: In U.S. data, nonfarm payrolls collapsed 20.5M in April and the unemployment rate jumped to 14.7%. Wholesale inventories fell 0.8% in March, while sales plunged 5.2%.

TOP NEWS: Shares of Uber ($UBER) were 5% higher near noon after the ride-hailing giant reported Q1 results, noting that Monthly Active Platform Consumers rose to 103M, versus 93M last year. The company also noted on its quarterly call that a higher percentage of Rides customers are using its Uber Eats service, and demand for Eats is "enormous."

In other earnings news, Roku ($ROKU) shares fell 7% after the company reported in-line Q1 earnings, with the company saying that it is "likely" that the impacts from the COVID-19 pandemic will remain "for some time." Analysts at Wedbush and Loop Capital raised their price targets on the shares following the report, while Susquehanna analyst Shyam Patil cut the firm's target to $145 from $170.

Meanwhile, shares of TripAdvisor ($TRIP) were 4% lower near noon after the company reported lower than expected Q1 earnings and revenue, adding that it doesn't expect to buy back stock "for the foreseeable future." The company added in its Q1 shareholder letter that it expects "significantly negative EBITDA" in Q2.

In non-earnings news, Disney ($DIS) shares rose 2% after the company announced last night that a phased reopening of Disney Springs will begin on May 20. The media and parks giant said that, during the initial opening phase, Springs will have limitations on capacity, parking, and operating hours. Additionally, Bloomberg reported that Shanghai Disneyland has sold out of tickets for its May 11 reopening following a four-month closure due to the COVID-19 pandemic.

MAJOR MOVERS: Among the noteworthy gainers was Herbalife Nutrition ($HLF), which rose 11% after it reported quarterly results and said it is nearing a resolution with the SEC and DOJ over FCPA matters. Also higher after reporting quarterly results were Camping World ($CWH) and American Axle ($AXL), which gained a respective 30% and 38%. 

Among the notable losers was Motorola Solutions ($MSI), which slid 3% after reporting quarterly results and withdrawing full year guidance. Also lower after reporting quarterly results were Cloudflare ($NET) and Appian ($APPN), which fell 10% and 8%, respectively.

Source: (

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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