Benchmarks closed mixed on Wednesday as data showed that private payroll had furloughed more than 20 million workers in April, highlighting the economic impact of the pandemic. However, gains in technology shares offset losses and helped the Nasdaq to end in green.
The Dow Jones Industrial Average (DJI) fell 218.45 points, or 0.9%, to close at 23,664.64 and the S&P 500 lost 20.02 points, or 0.7% to close at of 2,848.42. While, the Nasdaq Composite Index closed at 8,854.39, adding 45.27 points, or 0.5%. The fear-gauge CBOE Volatility Index (VIX) increased 1.5%, to close at 34.12. Declining issues outnumbered advancing ones for 1.72-to-1 ratio on the NYSE and a 1.08-to-1 ratio on the Nasdaq favored decliners.
How Did the Benchmarks Perform?
Out of the 11 major S&P 500 sectors, four ended in the positive on Wednesday, with technology stocks continuing the third straight day uptrend. Gains in shares of Microsoft Corporation MSFT, Apple Inc. AAPL and Amazon.com, Inc. AMZN lifted the broader index.
However, the S&P 500’s financials index ended in the negative territory as the biggest decliners. Mostly because the Treasury Department on Wednesday said that it would launch a long-planned 20-year bond to meet government’s borrowing needs amid the coronavirus outbreak.
Additionally, slump in oil prices after five-straight winning streak lead the S&P 500 energy sector close 2.6% lower. Shares of Occidental Petroleum Corporation OXY dropped 12.5% on May 6.
Overall, the S&P index recorded six new 52-week highs and two new lows. Meanwhile, Nasdaq recorded 48 new highs and 16 new lows.
Historic Job Loss in Private Sector
Recent economic data have shown the economic damage created by the novel coronavirus and the shutdown of the economy. On May 6, ADP and Moody’s Analytics’ report highlighted that private companies slashed nearly 20.236 million jobs in the month of April.
Nearly 8.3 million more employees have filed for unemployment benefits so far and economists expect another 3 million last week. Overall 30 million have filed claims in the past six weeks.
With bars and restaurants closed due to the pandemic, 8.6 million employees lost job in the services and hospitality sector. This was closely followed by the trade, transportation and utilities sector that had 3.44 million furloughs, while construction dropped 2.48 million.
The sectors reporting gains are education, with 28,000, and management of companies and enterprises, at 6,000.
Q1 Earnings Report
With majority of the S&P 500 companies reporting earnings this week, a clear picture emerging this season is showing a significant drop in corporate profitability as a result of the coronavirus pandemic. In fact, the S&P 500 earnings for the June quarter and full-year 2020 are now expected to be down 39.7% and 21.8%, respectively. (Read More: Making Sense of the Pandemic Earnings Picture)
Share of the Walt Disney Company DIS dropped 0.2% on Wednesday after the company reported second-quarter fiscal 2020 earnings after market close on May 5. The company reported adjusted earnings of 60 cents per share, missing the Zacks Consensus Estimate by 27.7% and also plunging 63% year over year. The pandemic had lead the entertainment giant to close its parks and hotels indefinitely, suspend cruise line, halt film and TV productions and shutter retail stores. (Read More)
On May 6, CVS Health Corporation CVS reported first-quarter 2020 adjusted earnings per share of $1.91, an increase of 17.9% year over year and surpassing the Zacks Consensus Estimate by 17.2%. In the reported quarter pharmacy services revenues were up 4.2% to $34.98 billion, driven by growth in specialty pharmacy, brand inflation, increased total pharmacy claims volume, greater use of 90-day prescriptions and early refills of maintenance medications as consumers prepared for the coronavirus pandemic. (Read More)
Shares of CVS Health Corporation, a Zacks Rank #3 (Hold) companydropped 1.3%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of General Motors Company GM jumped nearly 3% on Wednesday after the company reported adjusted earnings of 62 cents per share in first-quarter 2020, surpassing the Zacks Consensus Estimate of 18 cents. The carmaker reported revenues of $32,709 million, surpassing the Zacks Consensus Estimate of $32,587 million. The company reported stronger-than-expected contribution from the North American segment. (Read More)
Stocks that Made Headline
Spirit Q1 Loss Wider Than Expected, Stock Takes a Hit
Spirit Airlines SAVE incurred loss of 86 cents per share (excluding 45 cents from non-recurring items) in first-quarter 2020, wider than the Zacks Consensus Estimate of a loss of 60 cents. (Read More)
Apache's Q1 Loss Narrower Than Expected, Sales Miss Mark
Apache Corporation APA reported first-quarter 2020 loss per share — excluding one-time items — of 13 cents, narrower than the Zacks Consensus Estimate of a loss of 30 cents. This better-than-expected result is led by improved Permian production. (Read More)
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Microsoft Corporation (MSFT) : Free Stock Analysis Report
Apache Corporation (APA) : Free Stock Analysis Report
Amazoncom Inc (AMZN) : Free Stock Analysis Report
Apple Inc (AAPL) : Free Stock Analysis Report
CVS Health Corporation (CVS) : Free Stock Analysis Report
The Walt Disney Company (DIS) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
Spirit Airlines Inc (SAVE) : Free Stock Analysis Report
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