Market Brief: May 8, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Friday, May 8, 2020
Looking ahead. The stock market continues to rally in the face of grim economic news. On Friday, data showed the U.S. unemployment rate soared to 14.7% in April as employers cut 20.5 million jobs during the month. Recent surveys of manufacturing, services, and business investment activity all showed tumbling figures. But U.S. stock indexes all closed the week with solid gains. As always, investors are looking to the future, and the economic data reflects conditions as they were last week, last month, or last quarter. Those focused on the recovery believe that the worst is already behind us and are moving to price in better data ahead. And trillions of dollars of monetary and fiscal policy stimulus have provided powerful tailwinds to both that recovery and risk assets, such as stocks. Regardless of the jobs data, the Dow Jones Industrial Average closed up 455 points, or
1.9%, on Friday. The S&P 500 rose 1.7% and the Nasdaq Composite gained 1.6%. The small-cap Russell 2000 index, more sensitive to upturns and plunges in the economy, added 3.5%.
DJIA 24,331.32 455.43
S&P 500 2,929.80 48.61
NASDAQ 9,121.32 141.66
US 10-Year Note 0.69 0.05
Dollar Index 99.77 -0.12
Crude Oil 24.69 1.14
Gold 1,708.50 -17.30
Global Dow 2,637.22 47.44
Powered by Dow Jones Research, FactSet, Eurostat, SIX Financial Information.
The U.S. Lost 20.5 Million Jobs in April
The coronavirus pandemic claimed 20.5 million jobs in April as companies across America were forced to close and consumers stayed home to cap the disease’s spread.

The Labor Department said Friday that the job losses in April followed a downwardly revised loss of 870,000 in March. So far, about one in five workers are unemployed.

Investors knew this would be one of the worst jobs reports in history. The decline in nonfarm payrolls for April is about three times as bad as the jobs lost over the entire Great Recession, with the depth of the losses not seen since the Great Depression. But the headline number was about in line with the 21 million job losses economists predicted, and the unemployment rate—at least on the surface—looks not as bad as feared.

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Japanese Regulator Grants Special Approval for Gilead’s Covid-19 Drug
Japan’s drug regulator issued a special approval on Thursday, allowing the Gilead Sciences antiviral remdesivir to be used to treat Covid-19 patients in the country.

The approval came less than a week after the U.S. Food and Drug Administration issued its own emergency use authorization for remdesivir in Covid-19 patients. Japan acted extraordinarily quickly: Gilead submitted its application with the regulator only on Monday.

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Royal Caribbean Expects Full-Year Loss, Considers Additional Financing Sources
Royal Caribbean Cruises said Friday that it expects to incur a net loss in the first quarter and full year, byproducts of the coronavirus pandemic’s freeze of cruising activity.

As of April 30, Royal Caribbean had about $2.3 billion of cash and cash equivalents, the company said Friday in an update of its financial situation. It added that it’s considering seeking additional financing sources, but it did not elaborate.

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Shanghai Disneyland Tickets Sold Out in Minutes. Disney Stock Is Rising.
Walt Disney stock jumped Friday morning after the company announced that Disney Springs—an outdoor shopping, dining, and entertainment complex outside of Disney World Resort in Orlando, Fla.—will begin a phased reopening starting on May 20. The rest of the Disney World Resort, including theme parks and resort hotels, will remain closed, the company said.

The announcement came as the company’s theme park in China—Shanghai Disneyland—is busy preparing for a reopening on May 11 after a four-month shutdown. Tickets for the reopening—with limited capacity under government regulations—sold out in minutes after bookings started Friday 8 a.m. local time, a sign that Chinese consumers are ready to pull out their wallets for the entertainment giant as the nation recovers from the coronavirus pandemic.

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Marijuana Grower Cronos Crimped by Virus
Canadian pot producer Cronos Group distinguished itself early by getting the backing of big tobacco name Altria Group, but Cronos has never sold much cannabis. That didn’t change in the March quarter. Friday morning, Cronos reported all of $8 million in revenue for the quarter and growing operating losses. At least it has Altria’s money to count on.

Cronos stock was down 27% for the year at Thursday’s closing price of $5.59. In Friday afternoon trading, shares were down more than 4%. With its balance sheet still boasting $1.3 billion in cash from Altria, investors still award Toronto-based Cronos a $2 billion market capitalization.

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Macy’s Delayed Its Earnings Report, Yet the Stock Is Rising
Macy’s is delaying its first-quarter earnings results. But that didn’t stop the stock from rising on Friday.

Normally, its quarterly report would need to be filed by June 11 under the Securities and Exchange Commission’s rules. But late Thursday it announced a modified schedule because of business disruptions, store closures, and employee furloughs brought about by the coronavirus pandemic. Macy’s now plans to release its full results and hold an investor call on July 1, the company said.

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Hydroxychloroquine Doesn’t Lower Risk of Death for Coronavirus Patients, Study Finds
An observational study published Thursday in the New England Journal of Medicine tracked more than 1,000 Covid-19 patients at a large New York City medical center, and found the generic malaria drug hydroxychloroquine didn’t lower the risk of patients dying or needing to be intubated.

The study wasn’t randomized, and had several limitations associated with observational studies. But it is the latest in a series of studies that have served to tamp down early excitement over the drug, which was touted heavily by some commentators and by public officials, including President Donald Trump.

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Bitcoin Rallies Above $10,000. Don’t Think of It as a Hedge.
Bitcoin rose above $10,000 late on Thursday and traded near that level on Friday, at about $9,930, as enthusiasm has grown for the digital money. The price has more than doubled from less than $4,000 in March.

As always with Bitcoin, there are several possible explanations for the surge, of varying plausibility. But a look at the price chart makes it seem that Bitcoin’s move is closely correlated with swings in most other risky assets, which have rebounded aggressively in the past month after falling in March.

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UnitedHealth Is Giving Back $1.5B to Help Customers
Health insurance giant UnitedHealth Group said it is giving back more than $1.5 billion to customers, in the form of credits and waived copays, among others. The move is due to an unexpected consequence of the Covid-19 pandemic: falling medical costs.

UnitedHealth’s move, which it said aims to support its customers during the pandemic, will put pressure on other insurers to do the same.

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With Sports Shut Down, Cord-Cutting Picks Up Steam. R.I.P., Cable TV?
Cord-cutting—people dropping their cable and satellite TV subscriptions—predates the onset of Covid-19. But the pandemic is exaggerating the trend, creating deeper issuers for programming that relies on those services for distribution.

For one thing, it has long been the conventional wisdom that one of the few reasons people have hung on to their pay-TV subscriptions is access to live sports. With almost all professional and college sporting events shut down, that argument carries no weight. Meanwhile, with U.S. unemployment at the highest rate since the Great Depression, and so many options for free or low-cost subscription streaming video, Americans are fleeing pay TV at a record rate.

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