Market Brief: April 1, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Wednesday, April 1, 2020
Sliding Lower. Stocks kicked off April with steep losses on Wednesday, falling as investors braced for an onslaught of negative news around the Covid-19 pandemic and its economic impact. The Dow Jones Industrial Average finished around 974 points lower, down 4.4%, near 20,943, according to preliminary figures, while the S&P 500 shed around 114 points, or 4.4%, closing near 2,471. The Nasdaq Composite ended near 7,361, off around 340 points, or 4.4%. Stocks fell sharply in late February and March before recouping some of the decline, with the S&P 500 logging a 20% quarterly decline, its largest since 2008, and the Dow falling more than 23% for its biggest first-quarter decline on record and largest quarterly fall since 1987.
DJIA 20,943.51 -973.65
S&P 500 2,470.50 -114.09
NASDAQ 7,360.58 -339.52
US 10-Year Note 0.60 -0.07
Dollar Index 99.43 0.39
Crude Oil 21.05 0.57
Gold 1,600.80 4.20
Global Dow 2,369.06 -96.41
Powered by Dow Jones Research, FactSet, Eurostat, SIX Financial Information.
Whiting Petroleum Is the First Big-Name Oil Producer to File for Bankruptcy
Denver-based oil producer Whiting Petroleum filed for bankruptcy on Wednesday, making it the first substantial public company to do so amid a stunning decline in oil prices.

Shares of Whiting had traded over $150 as recently as 2015, but they fell below $1 in the past few weeks, as the company’s debt troubles drove many investors away. Its stock closed at 67 cents on Tuesday. Oil has lost more than two-thirds of its value this year.

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Oil Giant BP Cuts Spending and Slashes U.S. Shale Output in ‘Brutal’ Environment
BP shares slipped 1.8% on Wednesday, as the oil major cut spending by 25% in what Chief Executive Bernard Looney said could be the “most brutal environment for oil and gas businesses in decades.”

The London-listed company said capital spend for 2020 would now be around $12 billion, 25% lower than its previous guidance, including a $1 billion reduction in spend on its U.S. shale business BPX Energy.

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Saudi Power Play Could Send Oil Below $20 a Barrel for an Extended Period
The near-term fate of the oil industry is in the hands of a very few players—most important, the ruling family of Saudi Arabia. Its decision to move ahead with a production boost on Wednesday means the world will be awash in oil at a time when oil demand is plummeting because of the coronavirus.

The U.S. urged Saudi Arabia and Russia to back off plans to increase production. While Russia is reportedly not going to pump more, the kingdom ignored the plea. It plans to raise production to 12.3 million barrels a day, up from 9.7 million a day in February. Oil prices, already down more than 50% in March, were moving lower on Wednesday.

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There’s More Pain Ahead for Already-Beleaguered Factories
American manufacturing activity slipped in March as the coronavirus and oil price war hit factories and prompted job cuts in an already-shaky sector of the economy.

The Institute for Supply Management said its index, based on a survey of manufacturing companies across the country, fell to 49.1 in March from 50.1 in February. The below-50 print represents contraction, though the decline in activity wasn’t as bad as economists feared. Economists surveyed by The Wall Street Journal expected a reading of 44.5 for March.

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American Industry Declares War on Covid-19. Here’s What That Means.
U.S. manufacturing is mobilizing to build a modern “Arsenal of Democracy” in the battle against the Covid-19 coronavirus.

Instead of ships, tanks, and bombers—products Franklin Delano Roosevelt called for during World War II—America needs ventilators for critically ill patients. Industry has responded and is preparing a huge increase in production in coming weeks.

General Motors, which produced tanks during World War II, will build a Ventec Life Systems ventilator at a plant in Indiana. Ford Motor, which made bombers during the war, wants to build up to 200,000 ventilators in 2020 by partnering with General Electric to build a basic ventilator licensed from Airon.

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AT&T Names Founding Hulu Chief Jason Kilar as WarnerMedia CEO
AT&T Inc. tapped former Hulu boss Jason Kilar as chief executive of its WarnerMedia unit, which houses HBO, CNN and the soon-to-launch streaming service HBO Max.

Mr. Kilar succeeds John Stankey, 57 years old, who last year gained an additional title as AT&T’s chief operating officer, putting him in line to succeed company Chief Executive Randall Stephenson. Mr. Kilar will report to Mr. Stankey.

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T-Mobile Finally Bought Sprint. It Wasn’t Easy.
T-Mobile US has completed its long-pending acquisition of Sprint, the company said on Wednesday morning. The deal combines the previously third- and fourth-largest U.S. wireless carriers, after Verizon Communications and AT&T. In a move mandated by federal regulators, it also equips Dish Network with a collection of assets meant to allow it to become a fourth nationwide competitor.

With the closing of the deal, old T-Mobile’s COO Mike Sievert will become CEO of New T-Mobile, succeeding John Legere. Sievert will oversee the complex process of combining T-Mobile and Sprint’s networks, retail operations, and customer bases. Magenta-wearing Legere had previously said he planned to remain CEO until his contract expired on April 30. He’ll remain on T-Mobile’s board of directors until June 2020.

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Friday’s Jobs Report Will Be Ugly. The Ugliest Is Yet to Come.
Some economists estimate more than 20 million jobs could be lost in coming weeks and jobless claims will extend last week’s record 3.3 million, but Friday’s jobs report isn’t likely to reflect the depth of the labor-market crash because households and businesses were surveyed before coronavirus shutdowns cascaded across the country and layoffs started to mount.

Payroll provider ADP provided an early glimpse of how current data may not reflect reality on the ground as its survey period, like the Labor Department’s, ends on the 12th of the month. ADP said Wednesday that small businesses eliminated 90,000 jobs in March, a decline that was was offset by hiring last month across larger companies, resulting in an overall drop in private payrolls of 27,000.

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Industrial Megadeals Are Still Being Completed as Covid-19 Outbreak Grows
Industrial megadeals are still closing during the Covid-19 coronavirus outbreak.

General Electric stakeholders probably feel a little more secure Wednesday morning. The company has about $20 billion in fresh cash after closing on the sale of its biopharma division to Danaher, the industrial-health care hybrid conglomerate, on Tuesday evening.

United Technologies also received regulatory approval to merge with Raytheon this week. That deal is slated to close on Friday. The merger catalyzes two other huge transactions which will create three new stocks: an aerospace giant, called Raytheon Technologies, along with a stand-alone elevator maker, called Otis, and an air-conditioning company, to be called Carrier.

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Another Hydroxychloroquine Trial Still Leaves Questions on Its Use Against Covid-19
Early data from yet another study of the antimalaria drug hydroxychloroquine in Covid-19 patients is interesting, and perhaps promising, but doesn’t clear up questions about the therapy’s efficacy, analysts say.

The study, conducted by scientists at the Renmin Hospital of Wuhan University and distributed before peer review on Monday, is among the first randomized, double-blind clinical trials of hydroxychloroquine in Covid-19 patients.

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