“Turning the economy back on is much more challenging than turning it off.” 4 experts weigh in on reopening the economy.
Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York City, November 21, 2019.Stocks moved between gains and losses on Wednesday during a volatile trading session.
The reopening trade had another strong start, led by travel stocks such as airlines. All three large cap indexes and the Russell 2000 were looking to extend gains from Tuesday. Here's what's happening.3:25 pm: Twitter is safe from legal action, but Facebook not so much, says Cowen Shares of Twitter dropped more than 4% at the low on Wednesday after President Donald Trump threatened legal action against the social media platform, which slapped warning labels on two of Trump's tweets about mail-in ballots. But Cowen said that the company will most probably be fine. "Importantly, only Congress -- not the Administration -- can change Section 230. And we see very little chance Congress will do that anytime soon," the firm said. Section 230 of the 1996 Communications Act protects social media platform's editorial decisions. For Facebook, however, there could be issues, the firm said. "Trump's broader attack on social media today could potentially rebuild Republican support for a Facebook antitrust lawsuit," Cowen's Paul Gallant said. "Antitrust has nothing to do with platforms' content decisions, but if the FTC commissioners are considering a lawsuit against a major company like Facebook, they might feel more comfortable pulling the trigger if they felt they had political/public support." –The Dow traded more than 300 points higher, or 1.3%, as it tried for a second time to close above 25,000. The 30-stock Dow hasn't achieved this milestone since March. The S&P 500 also gained 0.9% and was on pace to close above 3,000. That would also be the S&P 500's best close since March. —The S&P 500 swung and missed Tuesday when it rose above its 200-day moving average but closed below it. The S&P was again above the 200-day, and in a late burst looked set to close above it Wednesday. The 200-day is a2:55 pm: Thursday report should show whether drivers fueled up at start of summer driving season Government oil and gasoline supply data is expected Thursday morning, and it should show whether Americans fueled up ahead of the Memorial Day weekend, the official start of summer driving season. Tom Kloza of OPIS said his survey of 15,000 gasoline stations shows gasoline demand was up a modest 5.6% Friday through Monday, compared to the prior weekend, but down 28.9% from the year earlier holiday weekend. Gasoline purchases have shown a steady increase, and demand is important since in normal times, the U.S. driver makes up 10% of global oil demand. Michael Tran, global energy strategist at RBC, monitors traffic congestion data and said there were signs that Memorial Day was not particularly strong for the gasoline market. "Following several weeks of slow and steady improvement, our real-time GPS data suggests that many major US cities saw traffic regress even compared to activity seen over recent weekends," he wrote, noting Los Angeles traffic was down 9% from the week earlier. Analysts expect a recovery in gasoline demand this year to about 85% of normal levels, since so many jobs have been lost and many people should continue to work at home. —Casino company MGM Resorts International said Wednesday it would reopen a handful of its Las Vegas casino locations on June 4. Following the closures of all its U.S. properties amid the coronavirus pandemic, MGM will be reopening the Bellagio, the New York- New York, the MGM Grand and The Signature next Thursday. "At opening, amenities at all properties will be limited. As demand for the destination builds, additional venues within these resorts will open and other MGM Resorts properties on The Strip will reopen," the company said in a2:40 pm: Analysts say US-China tension is future headwind for market, Chinese ETF weakens The iShares China Large Cap ETF XFI hit its low of the day after Secretary of State Mike Pompeo said the U.S. no longer recognizes Hong Kong's autonomy. The move was not unexpected after Beijing said it was imposing more security measures on Hong Kong. U.S. stocks that were sensitive to the trade war concerns are not reacting. The State Department was required to issue a determination on Hong Kong's autonomy under pro-democracy legislation passed by Congress late last year. The U.S. recently expanded its crackdown of Huawei, and the relationship with Beijing has become increasingly strained. The Chinese yuan has been most sensitive to the deterioration in China-U.S. relationship. It continues to hit lows. "Our view is this is a significant development and it's serious, but it's more evolutionary than revolutionary. There are still very strong commercial ties between the US and China, and some of the things China is doing reflect their own weakness at home rather than the US," said Paul Christopher, head of global market strategy at Wells Fargo. "Voters, whether Republican or Democrat now have a net negative opinion of China. We're going to see more rhetoric about this," he said. "It could end up being a headwind once the market finishes pricing in all of this hopium," Christopher said. —Cowen CEO Jeffrey Solomon said that optimism about a quick recovery from the economic recession and the potential for fewer than expected people and businesses defaulting on loans is driving bank stocks higher. "The rally in financials has been a function of the fact that people are expecting that we won't have as deep a recession maybe as we previously heard. And the loan loss reserves for banks won't be as bad as they were the last time we had a recession," Solomon said on "Power Lunch." "So I just think people are saying these are trading are discounts to book value, and if you have any soft of sanguine view over the next five years, this is going to be a really great entry point for people in financials." Bank stocks have been some of the strongest performers in recent sessions. The KBW Bank Index has risen more than 5% on Wednesday and is more than 20% above where it closed on May 13. —About three stocks advanced for every decliner at the New York Stock Exchange as investors increased bets on the economy reopening. Overall, about 2,000 NYSE-listed stocks were up while 865 declined, according to FactSet. —Softbank is considering cutting as much as 10% from the staff of its Vision Fund investment arm, according to a Bloomberg News report. Based in London and with offices in San Francisco and Tokyo, the fund employs about 500 people. The $100 billion Vision Fund is known for providing seed capital for often-unknown startups. CNBC has reached out to Softbank for comment. –Around midday, the S&P 500 traded back above the key 3,000 mark as it tries to close above that level for the first time since March. The Dow was up more than 200 points, or about 1%, while the Nasdaq Composite struggled with a 0.5% decline. The bifurcated market action comes as investors seemingly sold stocks that benefited from stay-at-home orders and added to positions in companies that benefit from the economy reopening. —The U.S. unemployment rate likely will remain well above that of other nations because of the way it has handled the job crisis associated with the coronavirus pandemic, according to Goldman Sachs. In the near term,but still staying around 8% as 2021 closes. That's because while other countries subsidize employers to continue paying workers, the U.S. – and Canada – have focused more on providing payment to displaced workers, in many cases above what they were making. While the firm expects the situation to weigh on the recovery, it also said the payments will continue to provide households with disposal income that will help boost growth.S&P Global said the number of potential debt downgrades is at an all-time high. The firm said there are now 1,287 issuers, rated AAA to B-, on the potential downgrade list. They either have negative outlooks or ratings on CreditWatch with negative implications. The number surpassed the previous record of 1,028 from April, 2009. The ratings agency said it added 550 issuers since March, including 490 facing direct economic impact from the pandemic, mostly from financial institutions, consumer products and utilities. It also removed 123 issuers from its list, with 110 of those downgraded. In the last month, the ratings of 247 issues from the list were lowered and 134 of those remain on the list for potential downgrade. About 64% of those on the list have risk from the impact of coronavirus-related containment measures to their operations. "Generally, we expect heavy credit erosion in coming months as issuers, especially those in the lower-rated spectrum come under heavy fire from poor earnings, continued difficulties in managing cost structures, and market volatility creating limited funding opportunities," said Sudeep Kesh, head of S&P Global Credit Markets Research.11:00 am: Tractor Supply is top-performing retail stock since lockdown measures went into effect Shares of Tractor Supply have gained more than 45% since March 16, making it the top-performing retailer since lockdown measures went into effect. The farming supply retailer has seen its sales surge. On Tuesday in an earnings preannouncement, the company said it expected record-breaking sales and earnings in the current quarter, and that comparable store sales would grow by 20% to 25%. The company is set to report second quarter earnings on July 23. Shares traded more than 4% higher on Wednesday.The S&P 500 joined the Nasdaq in negative territory, falling 0.4% below where it closed on Tuesday, as tech stocks lost ground. The Dow has also retreated from earlier gains but it still up more than 80 points for the session.10:42 am: Here are the biggest analyst calls of the day: Tesla, Facebook, Pinterest, Apple & moreUBS downgraded Brown-Forman to sell from neutral.Baird downgraded Hyatt to neutral from outperform.Susquehanna upgraded Hibbett Sports to positive from neutral.Wedbush raised its price target on Tesla to $800 from $600.
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