Stocks reverse earlier gains to trade lower

Stocks erased earlier gains Tuesday as Wall Street digested a series of corporate earnings results and new economic data showing consumer confidence cratered in April amid the coronavirus pandemic. The Nasdaq underperformed against the S&P 500 and Nasdaq as Big Tech stocks including Facebook, Netflix and Amazon declined.

June contracts for West Texas intermediate crude oil (CL=F) reversed earlier declines sparked after a host of major funds including the United States Oil Fund said they were rolling their front contracts into the later contracts to try and avoid the risk of the most actively traded futures turning negative.

Meanwhile, positive updates on an easing of the coronavirus outbreak in global hot spots extended into this week. Italy reported daily new cases rose by 1,739, or the lowest since March 10, from 2,324 on Sunday. And in New York state, the daily death toll dropped to 337 from 367 the prior day, and hospitalizations were virtually flat. A day earlier, New York Governor Andrew Cuomo discussed restarting construction and manufacturing in areas of the state less hard-hit by the pandemic after May 15.

Market participants will be looking to economic data Tuesday including the Conference Board’s April consumer confidence index to gauge the recent economic damage induced by the pandemic. Still, many analysts noted that the latest economic data is taking a back seat to hopes that the stream of states eyeing May business reopenings will succeed in getting their local economies back on their feet, creating a blueprint for a broader economic jump-start.

Policymakers’ aggressive response to supporting the virus-stricken economy has also helped support equities. On Monday, the Small Business Association resumed taking applications for its multi-billion-dollar aid program, which was replenished with funds authorized by Congress last week. Meanwhile, the Federal Reserve broadened the scope of its Municipal Liquidity Facility to provide counties and cities with smaller populations with short-term credit.

“Certainly, the massive fiscal and monetary response to the dead stop of the economy accounts for much of that moderation” in the stock market in recent sessions, David Joy, Ameriprise chief market strategist, wrote in a note Monday. “But, investors also now well understand that for the next few months economic data is going to be exceptionally weak, and they’re taking it in stride.”

11:09 a.m. ET: Stocks, crude oil erase gains

The S&P 500 erased earlier gains of as much as 1.48% to trade slightly lower. Here were the main moves in markets, as of 11:09 a.m. ET:

  • S&P 500 (^GSPC): -3.72 points (-0.13%) to 2,874.76

  • Dow (^DJI): +9.84 points (+0.04%) to 24,143.62

  • Nasdaq (^IXIC): -79.42 points (-0.91%) to 8,650.86

  • Crude (CL=F): -$0.62 (-4.85%) to $12.16 a barrel

  • Gold (GC=F): -$10.80 (-0.63%) to $1,713.00 per ounce

  • 10-year Treasury (^TNX): -3.2 bps to yield 0.622%

10:52 a.m. ET: June contracts for WTI crude oil trade higher, reversing earlier losses

June West Texas intermediate crude oil futures shook off earlier declines to turn 1% higher Tuesday morning, trading at $12.91 per barrel.

The front contract had come under pressure earlier in the session after major funds including the United States Oil Fund, as well as S&P Dow Jones Indices, said they would be rolling over their holdings into later-dated contracts to mitigate the risk of the June futures turning negative.

10:00 a.m. ET: Consumer confidence slumps in April, according to Conference Board

The Conference Board’s closely watched index of consumer confidence slid to 86.9 in April from 118.8 in March, according to a statement Tuesday.

Consensus economists had expected the index to declined to 87.0, according to Bloomberg data.

The Conference Board’s Present Situations index tracking consumers’ assessment of current business conditions slumped to 76.4 in April from 166.7 in March, marking the largest drop on record. An index tracking consumers’ short-term outlook for business conditions, however, rose to 93.8, from 86.8 in March.

The decline in the former “reflects the sharp contraction in economic activity and surge in unemployment claims brought about by the COVID-19 crisis,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement.

“Consumers’ short-term expectations for the economy and labor market improved, likely prompted by the possibility that stay-at-home restrictions will loosen soon, along with a re-opening of the economy,” Franco added. “However, consumers were less optimistic about their financial prospects and this could have repercussions for spending as the recovery takes hold. The uncertainty of the economic effects of COVID-19 will likely cause expectations to fluctuate in the months ahead.””

9:31 a.m. ET: Stocks open higher

Here were the main moves in markets, as of 9:31 a.m. ET:

  • S&P 500 (^GSPC): +40.57 points (+1.41%) to 2,919.05

  • Dow (^DJI): +362.80 points (+1.5%) to 24,496.58

  • Nasdaq (^IXIC): +77.2 points (+0.87%) to 8,806.02

  • Crude (CL=F): -$0.18 (-1.41%) to $12.60 a barrel

  • Gold (GC=F): +$3.30 (+0.19%) to $1,727.10 per ounce

  • 10-year Treasury (^TNX): -1.9 bps to yield 0.635%

7:49 a.m. ET: PepsiCo posts better than expected 1Q profit, organic sales growth; withdraws full-year outlook

PepsiCo (PEP) reported organic sales growth in each of its major business segments for the first quarter, driving a top- and bottom-line beat relative to consensus expectations.

First-quarter organic revenue rose 7.9%, or well above the 3.6% growth expected. Core earnings per share of $1.07 were 4 pennies better than expected, and grew by 10 cents over last year.

By category, Frito-Lay – the largest contributor to operating profit – saw sales jump 7%, extending a 5.5% gain in the same quarter last year. Quaker Foods North America organic sales returned to growth of 7%, or more than reversing last year’s 1% decline. And PepsiCo Beverages North America posted an organic revenue jump of 6%, versus 2.5% last year.

Still, the company said it was withdrawing its full-year outlook as the coronavirus pandemic continues to stir up uncertainty.

“Despite a strong first quarter, there is still a great deal of uncertainty that exists in relation to COVID-19, including how geographies, retail channels and consumer behaviors will evolve over time,” the company said in a statement.

7:36 a.m. ET: 3M first-quarter results top expectations as face mask sales jump

3M (MMM), a leading manufacturer of protective face masks, reported first-quarter adjusted earnings per share of $2.16 on net sales of $8.1 billion. These results topped consensus expectations for adjusted EPS of $2.03 on sales of $7.88 billion, according to Bloomberg-compiled estimates.

“In the first quarter we saw strong growth in personal safety, as well as in other areas of our portfolio experiencing high demand due to the pandemic,” CEO Mike Roman said in a statement. “At the same time, we experienced weak demand in several end markets that were more severely impacted by actions taken around the world to slow the pandemic. 

3M said it doubled its global respirator output to 100 million per month, and saw “COVID-related respirator organic growth” of about $100 million during the quarter. 3M added it has not increased its respirator prices amid the pandemic.

3M also said it will start reporting monthly sales results beginning in May for more timely updates on its business performance.

7:24 a.m. ET: Caterpillar posts 21% first-quarter revenue drop as virus impacts machinery demand

Caterpillar (CAT) posted first-quarter revenue of $10.64 billion, representing a drop of 21% over last year, but a result that still topped consensus analyst expectations. Caterpillar’s quarterly adjusted earnings per share of $1.60 were 9 cents short of estimates, however.

Caterpillar said its top-line drop was driven by lower sales volume and “lower end-user demand and the impact from changes in dealer inventories.” Dealers increased their inventories by about $100 million in the first three months of the year, or 92% less than the same period last year, Caterpillar said.

The company added that its financial results will be impacted by the coronavirus for the remainder of the year, and declined to provide a full-year outlook.

Many of Caterpillar’s business operations have continued even amid widespread social distancing measures, with many governments having classified the company’s work as essential. Caterpillar said about 75% of its primary production facilities were operating as of mid-April.

7:10 a.m. ET Tuesday: Stock futures jump

Here were the main moves in markets, as of 7:10 a.m. ET Tuesday:

  • S&P 500 futures (ES=F): up 31 points, or 1.08%, to 2,900.00

  • Dow futures (YM=F): up 303 points, or 1.26%, to 24,302.00

  • Nasdaq futures (NQ=F): up 93 points, or 1.05%, to 8,917.25

  • Crude (CL=F): -$1.17 (-9.15%) to $11.61 a barrel

  • Gold (GC=F): -$1.50 (-0.09%) to $1,722.30 per ounce

  • 10-year Treasury (^TNX): +0.6 bps to yield 0.66%

6:05 p.m. ET Monday: Stock futures little changed as overnight session kicks off

Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:05 p.m. ET:

  • S&P 500 futures (ES=F): down 3.5 points, or 0.12%, to 2,865.5

  • Dow futures (YM=F): down 13 points, or 0.05%, to 23,986.00

  • Nasdaq futures (NQ=F): down 13.5 points, or 0.15%, to 8,810.75

Financial District Center, New York City, USA

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