Wall Street ends mostly higher as U.S.-China spat simmers

(Reuters) – U.S. stocks finished mostly higher on Friday after President Donald Trump announced measures against China in response to new security legislation that were less threatening to the U.S. economy than investors had feared.

The Dow ended the session slightly lower, but all three indexes rose for the week and registered a second straight month of gains. The S&P 500 added 17.8% for April and May, its biggest two-month percentage gain since 2009.

The S&P 500 initially extended losses after Trump said he was directing his administration to begin the process of eliminating special treatment for Hong Kong in response to China’s plans to impose new security legislation in the semi-autonomous territory.

But Trump made no mention of any action that could undermine the Phase One trade deal that Washington and Beijing struck early this year, a concern that had cast a cloud over the market throughout the week.

“He began speaking in a very tough tone,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina. “The market was worried he was going to announce something substantial, something detrimental to the U.S. economy. Then, as he spoke, it became clear the actions being taken were not going to be as dramatic as originally feared.”

Trump also said the United States is terminating its relationship with the World Health Organization, something he had threatened to do earlier this month.

S&P 500 technology shares .SPLRCT gave the index its biggest boost, while financials .SPSY were the biggest drag.

The latest confrontation between the U.S. and China has fueled concern that worsening tensions between the two world’s largest economies could derail the recent sharp gains in the stock market.

Expectations of a quick economic recovery from the coronavirus pandemic have driven the S&P 500 .SPX up more than 30% from its March lows.

The Dow Jones Industrial Average .DJI fell 17.53 points, or 0.07%, to 25,383.11, the S&P 500 .SPX gained 14.58 points, or 0.48%, to 3,044.31, and the Nasdaq Composite .IXIC added 120.88 points, or 1.29%, to 9,489.87.

For the month, the Dow added 3.9%, the S&P 500 gained 4.5%, and the Nasdaq rose 6.8%. For the week, the Dow and S&P 500 each rose more than 3%, and the Nasdaq gained 1.8%.

New York Governor Andrew Cuomo said Friday that New York City is “on track” to enter phase one of reopening on June 8, and he said five upstate regions will now transition to phase two.

Federal Reserve Chair Jerome Powell, speaking in a webcast organized by Princeton University Friday, reiterated the U.S. central bank’s promise to use its tools to shore up the economy amid the coronavirus pandemic.

Twitter (TWTR.N) was down 2% and Facebook Inc (FB.O) shares slipped 0.2%, a day after Trump signed an order threatening social media firms with new regulations over free speech.

Upscale department store chain Nordstrom Inc (JWN.N) slumped 11% after it reported a near 40% fall in quarterly sales due to pandemic-led store closures.

Salesforce.com Inc (CRM.N) slipped 3.5% as the cloud-based business software maker cut its annual revenue and profit forecasts.

Declining issues outnumbered advancing ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored advancers.

The S&P 500 posted 17 new 52-week highs and no new lows; the Nasdaq Composite recorded 60 new highs and 14 new lows.

Volume on U.S. exchanges was 13.62 billion shares, compared to the 11.3 billion average for the full session over the last 20 trading days.

Source: Read Full Article

Blackstone's EagleClaw Midstream sues Caprock over troubled deal

(Reuters) – Private-equity backed EagleClaw Midstream is suing the former owners of Caprock Midstream, alleging they failed to disclose tens of millions of dollars of liabilities during acquisition talks.

EagleClaw in 2018 acquired natural gas pipeline operator Caprock Midstream Holdings from Energy Spectrum Capital and Caprock Midstream Management for $950 million. After the deal closed, EagleClaw discovered “numerous issues and claims for liabilities” with the pipeline assets, according to a lawsuit filed in a Texas court in Houston.

The largest amount was a $22 million bill presented after the close by Cimarex Energy Co (XEC.N) from an audit of a gas gathering, water handling and electrical services agreements, the suit claimed. EagleClaw is owned by private equity firms Blackstone Capital Partners and I Squared Capital.

EagleClaw would not have completed the deal without obligating Caprock to defend those claims had it been aware of the audit, according to the lawsuit. Representatives for EagleClaw did not immediately respond to a request for comment.

Caprock and Energy Spectrum Capital could not immediately be reached for comment.

Blackstone and I Squared did not immediately reply to requests for comment.

A Cimarex spokesman had no immediate comment.

EagleClaw’s suit seeks undisclosed damages for breach of contract and access to $4.75 million held in an escrow account.

The company said it also expects to incur $4 million in costs to fix “severe corrosion” in a gas pipeline it claimed had defective joints, and $600,000 to repair a natural gas processing plant in Texas that suffered shutdowns.

The case is Eagleclaw Midstream Ventures v Caprock Midstream, Harris County District Court, 2020-31025.

Source: Read Full Article

Wall St. climbs 1% as historic job losses fewer than feared

(Reuters) – Major U.S. stock indexes climbed on Friday and were on track to log solid gains for the week after data showing historic job losses from the coronavirus crisis were slightly fewer than feared.

All 11 S&P 500 sectors were positive, led by energy .SPNY and materials .SPLRCM.

The U.S. economy lost 20.5 million jobs in April, the Labor Department reported. Economists polled by Reuters had forecast payrolls diving by 22 million, but the decline still marked the steepest plunge since the Great Depression.

“It’s tough to call the jobs report, which is what everybody was waiting for, anything but a complete calamity, but relative to expectations you can see some silver linings in there,” said Brian Nick, chief investment strategist at Nuveen, pointing to the large number of temporary layoffs.

“Except for the initial panic in the month of March, in general the markets are ignoring economic data for the most part and are looking more at data related to COVID-19,” Nick said.

The Dow Jones Industrial Average .DJI rose 291.02 points, or 1.22%, to 24,166.91, the S&P 500 .SPX gained 32.84 points, or 1.14%, to 2,914.03 and the Nasdaq Composite .IXIC added 96.01 points, or 1.07%, to 9,075.67.

Financial markets on Thursday began pricing in a negative U.S. interest rate environment for the first time, as investors grappled with the economic consequences of the new coronavirus outbreak.

Stocks have staged a sharp rebound since late March from the coronavirus-fueled sell-off, helped by massive monetary and fiscal stimulus. The tech-heavy Nasdaq on Thursday erased its 2020 declines and turned positive for the year.

Investors are now watching efforts by a number of states to spark their economies by easing restrictions put in place to fight the outbreak.

“Several states are relaxing their stay-at-home orders now and governments and businesses have stepped up to support many workers and companies, but it remains to be seen what the new normal will look like,” said Tony Bedikian, head of global markets at Citizens Bank.

Optimism for markets was also fed by news overnight that U.S. and Chinese trade representatives discussed their Phase 1 trade deal, with China saying they agreed to improve the atmosphere for its implementation.

In company news, Uber Technologies (UBER.N) shares rose 5.9% after the company said ride service bookings slowly recovered in recent weeks.

Noble Energy (NBL.O) shares gained 10.7% after the company said on Friday it would curtail oil production and further cut its capital spending to cope with a plunge in oil prices.

Advancing issues outnumbered declining ones on the NYSE by a 4.68-to-1 ratio; on Nasdaq, a 3.19-to-1 ratio favored advancers.

The S&P 500 posted 10 new 52-week highs and no new lows; the Nasdaq Composite recorded 57 new highs and one new low.

Source: Read Full Article

Wall Street set to open higher on lockdown easing optimism

(Reuters) – U.S. stock indexes were set to open higher on Wednesday on hopes of a pickup in business activity with states easing coronavirus-led curbs, while investors looked past a stunning 20 million plunge in U.S. private payrolls last month.

After slumping to 2016-lows in March, the benchmark S&P 500 rebounded strongly in April on unprecedented stimulus and signs the outbreak was peaking.

But with macroeconomic data still foreshadowing a severe global recession, analysts have warned of another selloff, particularly if reopening economies sparks another wave of infections.

Data on Wednesday showed U.S. private employers laid off a record 20.236 million workers in April, setting up the overall labor market for historic job losses last month. The Labor Department’s more comprehensive report is due Friday.

“We knew this was going to be bad so it matches the jobless claims. A lot of the bad news for April is pretty much factored in,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“But markets are looking at potential recovery here, we’ve got a lot of States opening up. Businesses are starting to get going again but the question is, is it too fast?”

At 8:38 a.m. ET, Dow e-minis 1YMcv1 were up 102 points, or 0.43%, S&P 500 e-minis EScv1 were up 12.25 points, or 0.43% and Nasdaq 100 e-minis NQcv1 were up 48 points, or 0.54%.

General Motors Co (GM.N) jumped 6.5% in premarket trading after the automaker topped first-quarter profit expectations and outlined plans for a May 18 restart of most of its North American plants.

CVS Health Corp (CVS.N) gained 4% after the company posted better-than-expected first-quarter profit, as its pharmacy benefits management business and its drugstores benefited from customers stockpiling medicines due to COVID-19 lockdowns.

Activision Blizzard (ATVI.O) rose 6.8% after raising its revenue forecast on higher demand for video games such as its “Call of Duty” amid lockdowns.

Walt Disney Co (DIS.N) also inched higher even as it estimated that global measures to contain the coronavirus had cut its profits by $1.4 billion, mostly from its shuttered theme parks.

Mattel Inc (MAT.O) plunged 7.7% after the toymaker predicted a steep drop in second-quarter sales.

Source: Read Full Article

Wall Street surges on hopes of slowing coronavirus deaths

NEW YORK (Reuters) – U.S. stocks surged on Monday, with each of the major indexes rallying more than 5%, after a drop in the daily death toll in New York, the country’s biggest coronavirus hot spot, fueled hopes a leveling off of the pandemic was on the horizon.

On Sunday, New York, the biggest U.S. hot spot, reported virus-related deaths that had fallen slightly from the day before, the first instance in a week.

New York Governor Andrew Cuomo followed on Monday that hospitalizations of coronavirus patients are down and the rate of the rise in deaths has leveled off in the hardest-hit state, but he cautioned against complacency.

“It is definitely not going to be a one-way street but this potentially could be a turning point, we are starting to get some good news and hopefully that trend will continue,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

“But that is not to say it is going to be a smooth path. We all know from the recovery we experienced after the 2008 financial crisis there is always a potential for a negative development to cause the market to pull back again.”

Even with the positive signs, U.S. officials have braced the country for a “peak death week” from the pandemic, with the death toll topping 10,000.

The Dow Jones Industrial Average .DJI rose 1,232.49 points, or 5.85%, to 22,285.02, the S&P 500 .SPX gained 139.16 points, or 5.59%, to 2,627.81 and the Nasdaq Composite .IXIC added 415.36 points, or 5.63%, to 7,788.44.

All 30 Dow components were in positive territory, led by a gain of 17.54% in Boeing (BA.N) shares, while the defensive utilities .SPLRCU, up 7.59%, was the best performing of the 11 major S&P sectors.

The S&P 500 banking index .SPXBK jumped 6.78% and was poised for its best day in more than a week. Bank of America (BAC.N), Citigroup (C.N), Wells Fargo (WFC.N) and JPMorgan (JPM.N) advanced between 5.8% and 8.8%, tracking Treasury yields.

Wall Street’s fear gauge fell to its lowest in two weeks, but remained at elevated levels. During the financial crisis of 2007-08, the S&P 500 took months to establish a bottom even after the volatility index plummeted.

Despite Monday’s bounce, the S&P 500 .SPX remains down more than 22% from its mid-February record close.

S&P 500 companies are expected to enter an earnings recession in 2020, with declines in profit in the first and second quarters, according to IBES data from Refinitiv, as demand evaporates across sectors such as airlines, luxury goods and industrials. First quarter expectations now call for an earnings decline of 6% from the year-ago period.

Versace owner Capri Holdings (CPRI.N) surged 27.9% after saying it expects to open its stores after June 1 and that it would furlough all its 7,000 employees in North America.

Video conferencing app Zoom (ZM.O) fell 7.5% on concerns over its data-privacy practices and increased competition from deep-pocketed rivals.

Advancing issues outnumbered declining ones on the NYSE by a 8.45-to-1 ratio; on Nasdaq, a 5.11-to-1 ratio favored advancers.

The S&P 500 posted 2 new 52-week highs and no new lows; the Nasdaq Composite recorded 6 new highs and 28 new lows.

Source: Read Full Article