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Stock Market News for May 5, 2020

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Benchmarks made a dramatic turnaround on Monday to end in the green following gains among tech and energy shares. The gains overshadowed investors’ concern over rising U.S.-China tensions and downbeat sentiment from Berkshire Hathaway’s annual meeting.

The Dow Jones Industrial Average (DJI) rose 26.07 points, or 0.1%, to close at 23,749.76 and the S&P 500 gained 12.03 points, or 0.4% to close at of 2,842.74. While, the Nasdaq Composite Index closed at 8,710.7, adding 105.77 points, or 1.2%. The fear-gauge CBOE Volatility Index (VIX) decreased 3.3%, to close at 35.97. Declining issues outnumbered advancing ones for 1.09-to-1ratio on the NYSE and a 1.14-to-1 ratio on the Nasdaq favored decliners.

How Did the Benchmarks Perform?

Airline shares were among the biggest losers in the S&P 500 on Warren Buffett’s comments that Berkshire Hathaway dumped of its total stakes in the sector because of the coronavirus outbreak. Shares of major airlines Delta Air Lines, Inc. (DAL - Free Report) , United Airlines Holdings, Inc. (UAL - Free Report) and American Airlines Group Inc. (AAL - Free Report) dropped 6.4%, 5.1% and 7.7%, respectively.

However, gains from Microsoft, Apple and Amazon were the biggest lifts for the S&P 500. Overall, the S&P index recorded no new 52-week highs and three new lows. Meanwhile, Nasdaq recorded 18 new highs and 14 new lows.

Tech-Stocks Lifts Benchmarks

Monday, investors overlooked concerns from fresh U.S.-China trade tensions and tech and internet firms and gain in oil price helped benchmarks close higher. Earlier on Sunday, the Secretary of State Mike Pompeo said that there was “a significant amount of evidence” that the COVID-19 has emerged from a Chinese laboratory.

Additionally, investors closely followed Berkshire Hathaway’s annual meeting held on Saturday. While, Warren Buffett was optimistic over the long-term outlook for American economy, he believes that the global pandemic could significantly damage the economy and his investments. And the firm made a moveto dump stakes in major U.S. airlines.

Gains in the S&P 500’s information technology sector of 1.4% and energy sector helped the broader index rise 0.4%. The Dow’s 0.1% gain was boosted by Microsoft Corporation (MSFT - Free Report) and Apple Inc.’s (AAPL - Free Report) gain of 2.5% and 1.4%, respectively. This also helped offset declines of Caterpillar Inc. (CAT - Free Report) and The Walt Disney Company (DIS - Free Report) ’s loss of 2.9% and 2.2% respectively.

The tech-laden Nasdaq lifted by gains in Tesla, Inc. (TSLA - Free Report) and Amazon.com, Inc. (AMZN - Free Report) gain of 8.5% and 1.3% respectively.

Oil Price Gains as Coronavirus Lockdown Eases

Monday, U.S. crude settled above $20 a barrel on expectations that demand for oil will pick up as some American states and countries in Europe and Asia start to ease coronavirus lockdown measures. Several countries like Italy, Spain, Portugal, India and Thailand, began allowing some people to go back to work along with opening construction sites, parks and libraries.

Gain in oil prices helped the S&P 500’s energy sector rise 3.7%, making it the best performing sector on May 4. Shares of Phillips 66 (PSX - Free Report) and Chevron Corporation (CVX - Free Report) gained 10.7% and 2.2% respectively.

Poor Earnings Report

As of May 1, 55.4% of the S&P 500’s total members have reported for this quarter and by the end of this week more than 85% of the index’s member are scheduled to be released. The results have so far shown us the impact of Covid-19 on earnings. (Read More: Tech Sector Shows its Earnings Power)

Shares of Tyson Foods, Inc. (TSN - Free Report) slided 7.8% on Monday after the company reported second-quarter fiscal 2020 results. The food giant reported earnings of 77 cents per share, missing the Zacks Consensus Estimate of $1.21. Net sales advanced 4.3% to $10,888 million, but the top line fell short of the Zacks Consensus Estimate of $11,641 million.The company is facing hurdles related to the coronavirus pandemic, which are expected to elevate the company’s operating cost burden and weigh on its volumes in the remainder of fiscal 2020.(Read More)

Tyson Foods holdsa Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

On May 4, the Commerce Department reported that US Factory orders dropped 10.3% in March as the coronavirus pandemic began to shut down large parts of the economy. The drop is deeper than the expected 8.9%. Additionally, durable goods orders fell 14.7%, a bit higher than the prior estimate of 14.4%. Along with that orders for nondurable goods dropped 5.8%. The department expects orders to fall sharply and remain weak for months amid efforts to contain the coronavirus.

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