Wall Street set to bounce after historic oil rout

(Reuters) – Wall Street looked set to rebound on Wednesday as upbeat quarterly earnings reports lifted investor sentiment following a two-day selloff due to a record crash in oil prices, although companies warned of more pain in the coming months.

The S&P 500 index .SPX fell nearly 5% in the first two days of the week as May WTI contracts plunged below zero and the benchmark Brent LCOc1 hovered near 1999-lows, triggering alarm about the hit to the global economy from a near-halt in business activity.

Battered oil stocks attempted a comeback on Wednesday with Exxon Mobil (XOM.N) rising 3.8% and Chevron Corp (CVX.N) gaining 3.5% before the bell as oil prices gained slightly.

Trillions of dollars in stimulus have helped Wall Street recover from its March lows. The U.S. Senate on Tuesday approved another $484 billion in relief and the House of Representatives is expected to clear it on Thursday.

But the benchmark S&P 500 was still 19% below its record high as sweeping shutdowns spark layoffs and crush consumer spending, putting several sectors at the risk of collapse.

“Investors are looking at the economy very differently than they are looking at markets,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“The market is getting a lot of support from the Federal Reserve and the government. The economy is getting some, but the economy is going to move at a different pace.”

Estimates for U.S. jobless claims for the latest week range as high as 5.5 million, while a reading on April U.S. factory activity is likely to fall to levels last seen during the 2008 financial crisis. Both reports are due Thursday.

At 8:58 a.m. ET, Dow e-minis 1YMcv1 were up 389 points, or 1.7%, S&P 500 e-minis EScv1 were up 47.25 points, or 1.73% and Nasdaq 100 e-minis NQcv1 were up 135 points, or 1.6%.

Texas Instruments Inc (TXN.O) rose 2.5% as the chip industry bellwether reported better-than-expected first-quarter results and said a strong inventory allowed it to be prepared for disruptions caused by the pandemic.

Netflix Inc (NFLX.O), deemed a “stay-at-home” stock as the wide restrictions boost demand for online streaming services, more than doubled its own projections for new customers in the first quarter.

However, its shares fell 1.6% as it forecast a weaker second half if the lockdown measures were to be lifted.

Delta Air Lines Inc (DAL.N) reported its first quarterly loss in nine years, but shares gained 3.5% after the airline operator said cheap fuel and cost reduction measures will cut its expenses by about half in the current quarter.

Source: Read Full Article