Stocks Finish Negative After Oil Gives Up Gains

TOPLINE

The stock market finished slightly lower on Wednesday after a dismal report on U.S. payrolls showed 20 million job losses in April and the Treasury Department announced that it will issue a new 20-year bond to help finance government debt during the coronavirus pandemic.

KEY FACTS

The Dow Jones Industrial Average was down 0.8%, nearly 200 points lower, on Tuesday, while the S&P 500 fell 0.6% and the Nasdaq Composite gained 0.7%.

Stocks have moved higher in recent weeks amid increasing optimism on Wall Street over several states—including Georgia, Florida, Texas and California—beginning to reopen businesses and lift coronavirus lockdowns.

President Trump acknowledged in an interview with ABC on Tuesday that reopening parts of the U.S. economy would inevitably cost lives, but he also argued that the benefits of reopening outweigh the costs.

The Treasury Department, for the first time since 1986, will launch a new 20-year bond in an effort to help fund the record level of borrowing the government will need to do to help shore up the economy amid coronavirus.

Investors also grappled with more dismal economic data: ADP and Moody’s Analytics showed private payrolls dropping by 20.2 million in April, the worst monthly job loss in the history of that report.

Big tech stocks continued to outperform the market: The five FAANG stocks—Facebook, Apple, Amazon, Netflix and Google parent Alphabet—all finished higher on Wednesday.

Tangent

Oil prices reversed course, falling by as much as 5% and ending a five-day winning streak. Despite the recent volatility in oil markets, West Texas Intermediate futures are still up 28% for May.

Crucial quote

Four themes have been propelling the market’s rally in recent weeks: “reopening,” “positive linearity,” “drug/vaccine progress” and “stimulus,” according to Vital Knowledge founder Adam Crisafulli. He warns that these market drivers are “growing quite stale by now,” and for the market to make sustained gains higher, “fresh catalysts” will need to emerge.

What to watch for

The Labor Department’s April monthly jobs report will be released Friday: The unemployment rate is expected to rise from 4.4% to 16.1%, the highest level since 1939, according to Dow Jones.

Further reading

Stocks Lose Steam After Fed Vice Chairman Says Economy Needs More Support (Forbes)

Stocks Had Their Best Month In 33 Years, But Here’s Why Experts Are Skeptical (Forbes)

Warren Buffett Sells Airline Stocks Amid Coronavirus: ‘I Made A Mistake’ (Forbes)

The U.S. Economy Will Beat Coronavirus, Buffett Says: ‘Never Bet Against America’ (Forbes)

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