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US Stocks Ease for the Week as 1st Quarter Earnings Come In and Oil Prices Hit the Bottom of the Barrel

Weekly Update – April 24, 2020

  • U.S. Stocks finished on a positive note Friday, though down for the week as a rally in the Technology sector couldn’t beat out Monday’s historic WTI oil price collapse. For the week, the Dow Jones Industrial Average and the S&P 500 eased 1.9% and 1.3%, respectively, while the Nasdaq edged 0.2% lower. As stocks eased U.S. Treasury yields fell with the two-year and 10-year yields both decreasing 2 bps to 0.2% and 0.60%, respectively.
  • With 24.4% of S&P 500 companies reporting first-quarter results, 64.8% have exceeded earnings per share expectations, while about 59% have beaten revenue expectations. As of April 24, 2020, Refinitiv estimated the S&P 500 index’s first-quarter earnings growth rate to decrease 14.8% and its 12-month forward P/E ratio at 20.1. IBM, Snap and Texas Instruments impressed, whereas Netflix, Crocs, and Hershey disappointed.
  • May’s WTI crude oil price fell below $0 for the first time ever, as many holders were unable to take delivery and had to pay other market participants take it.
  • Weekly initial jobless claims of 4.43 million for the week ending April 17 were within consensus range and below the 5.25 million in the prior week.
  • The April US flash composite PMI hit a new series low of 27.4 versus consensus of 36.5 and March’s 40.9. The reading was the steepest reported decline since October 2009. Manufacturing activity fell to 33.6 from 44.5, below the 39.2 consensus, while Services fell to 11.7 from 26.4, below the 24.0 consensus.
  • The April global flash PMIs fell to record lows with services seeing outsized declines. Eurozone flash composite PMI fell to a record low of 13.5 in April from 29.0 in March, below the 18.0 consensus. UK flash PMI fell to 12.9 from 36.0, below the 31.4 consensus and a record low. Japan flash PMI fell to a record low of 27.8 from 36.2.
  • March durable goods orders fell 14.4% from February, worse than the consensus for a 12% decline. Elsewhere, final University of Michigan consumer sentiment for April of 71.8, up 0.8 from preliminary print of 89.1 in March.

CPWM Weekly Market Monitor (2020.04.24)

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