Market Update for 4 May 2020: Stocks, Gold, and Bitcoin

This article provides an overview of news that may be relevant to three different markets: equities (mainly U.S. stocks), commodities (mainly gold), and crypto (mainly Bitcoin).

The price information you’ll see in this article was taken around 08:00 UTC on 4 May 2020. The data providers used for pre-market trading data are as follows:

Two pieces of news seem to be on the minds of many investors today.

First, on Saturday (May 2), legendary American investor Warren Buffett, one of the world’s richest men, as well as the chairman and CEO of Berkshire Hathaway, made some worrisome comments at his company’s 2020 Annual Shareholders Meeting in Omaha, Nebraska, which was broadcast on Yahoo Finance.

According to a report by CNBC, during the meeting, Buffett explained why Berkshire Hathaway had not made any major investments recently despite the drop in U.S. stock prices as the result of the COVID-19 pandemic and despite the fact that his company is sitting on a mountain of cash (to be more precise, $137 billion in cash and equivalent instruments, according to Berkshire Hathaway’s latest 10-Q filing):

“We have not done anything, because we don’t see anything that attractive to do… Now that could change very quickly or it may not change…”

“We are willing to do something very big. I mean you could come to me on Monday morning with something that involved $30, or $40 billion or $50 billion. And if we really like what we are seeing, we would do it.”

As Anthony Pompliano (aka “Pomp”), Co-founder and Partner at Morgan Creek Digital, pointed out yesterday in a Q&A session (on the economy and financial markets) broadcast live on YouTube yesterday, Buffett’s hesitancy to pull the trigger could mean that he expects further falls in the prices of U.S. stocks.

Second, on Sunday (May 3), U.S. Secretary of State Mike Pompeo said during an interview with ABC’s “This Week” program that the Trump administration believed that the Chinese government “did all it could to make the sure the world didn’t learn in a timely fashion about what was taking place” in China in the early days of the COVID-19 outbreak. Furthermore, according to ABC, there are U.S. intelligence reports that say the coronavirus may have come from a lab in Wuhan and that China quietly stockpiled medical supplies (such as masks) in the early January.

Pompeo then went on to say that China’s mishandling of the COVID-19 crisis had resulted in the loss of hundreds of thousands of lives around the world and that President Trump intends to “hold those responsible accountable.”

CNN says that “multiple sources inside the administration say that there is an appetite to use various tools, including sanctions, canceling US debt obligations and drawing up new trade policies, to make clear to China, and to everyone else, where they feel the responsibility lies.”

Equities

Here is how various stock markets around the world are doing on Monday morning (London time):

  • Hong Kong’s Hang Seng: -4.18%
  • Japan’s Nikkei 225: -2.84%
  • France’s CAC 40: -3.70%
  • Germany’s DAX: -32.%
  • UK’s FTSE 100: -0.14%

Commodities

Spot gold is trading at $1,705.49, up $16.75 (or +1%).

In the year-to-date period, gold is up 17.50%.

Source: Market Update for 4 May 2020: Stocks, Gold, and Bitcoin | CryptoGlobe

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Stocks Rally, Dow Rises 700 Points On News Of Gilead’s Possible Coronavirus Treatment

Despite dismal economic data earlier this week, the stock market jumped on Friday as investors became more optimistic about the coronavirus outlook, amid news overnight that Gilead Sciences’ Covid-19 treatment was showing signs of success in clinical trials with patients.

KEY FACTS

The Dow Jones Industrial Average was up 3%, nearly 700 points, while the S&P 500 gained 2.7% and the Nasdaq Composite rose 1.4%.

Stocks got a boost thanks to news overnight that biotech company Gilead Sciences has made a breakthrough in its clinical trial of antiviral drug Remdesivir, which showed promising results in treating coronavirus.

The phase 3 trial, conducted at the University of Chicago, found that most patients treated with the drug had “rapid recoveries in fever and respiratory symptoms,” according to the original report from STAT News.

Adding to Wall Street’s optimism about the virus outlook was a White House press conference on Thursday night, in which President Trump outlined his plans for getting the U.S. economy back up and running.

Trump said some states that met criteria for testing and a low number of new cases would be able to reopen “literally tomorrow,” though he made it clear that the onus remains on state governors, who would be calling their own shots on when to reopen.

The market also got a boost from the news that embattled airline carrier Boeing, which saw its stock plunge by as much as 75% during the coronavirus sell-off, would resume production in the Seattle area later this month.

Crucial statistics

Gilead’s stock jumped on the news Friday, rising almost 10%, while Boeing BA stock rebounded by more than 13%. Shares of several big-name stocks led the market higher this week, despite falling slightly on Friday: Amazon AMZN and Netflix NFLX both hit new record highs, up 14% and 16%, respectively, while shares of Walmart WMT rose nearly 9%.

KEY BACKGROUND

With Friday’s rally sending stocks higher, the S&P 500 notched its first back-to-back weekly gains since early February. The index rose over 2% this week, while the Nasdaq NDAQ gained over 5% and the Dow is up around 1%.

Crucial quotes

“Markets are responding to an outlook that is a far cry from the doomsday scenario projected in the latter days of March and early days of April,” says Peter Essele, head of portfolio management for Commonwealth Financial Network. “We’ve moved from depression to recession, with a glimmer of light at the end of the tunnel.”

“While there has never been any doubt that the U.S. economy would come back online at some point, these three events, taken together, raised optimism (although doesn’t guarantee) that the comeback will be sooner rather than later,” according to a note from Bespoke Investment Group.

What to watch for

“The true litmus test over the next month will be whether payroll cuts have spilled over into additional sectors of the economy beyond leisure and hospitality,” predicts Essele. “If that ends up being the case, it’s quite possible that markets will retest lows, as the economy will require more than a simple shot of adrenaline to put things back on course.”

Further reading

Here Are 29 ‘Get Out And Go’ Stocks For The End Of The Coronavirus Quarantine (Forbes)

Trump Says Some States Will Be Able To Open ‘Literally Tomorrow’ If They Want To (Forbes)

Stocks Fall, Dow Tumbles 400 Points After Retail Collapse And Weak Bank Earnings (Forbes)

This Week’s Economic Data Is Concerning: Here Are The Latest Reports Showing The Impact Of Coronavirus (Forbes)

Full coverage and live updates on the Coronavirus

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I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an intern at Forbes in 2015 and 2016. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com

Source: Stocks Rally, Dow Rises 700 Points On News Of Gilead’s Possible Coronavirus Treatment

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The Stock Market Is In Free Fall On Coronavirus Fears. How Much Worse Will It Get?

Topline: The U.S. stock market has officially plunged into correction territory—at the fastest rate ever recorded, suffering its worst losses since the 2008 financial crisis this week amid ongoing panic over the spreading coronavirus and its impact on the global economy.

  • This week alone, the Dow Jones industrial average fell a total of 14%, the S&P 500 by 13% and the Nasdaq Composite by 12.3%.
  • The Dow plummeted nearly 1,200 points on Thursday—its biggest one-day drop ever, thanks to the coronavirus, which has now spread to at least 49 countries in a matter of weeks. Those losses continued on Friday, though the drop was somewhat less severe: The Dow fell 1.4%, while the S&P 500 sank 0.8%.
  • In a statement to reassure anxious investors, the Federal Reserve said on Friday that it was monitoring the “evolving risks to economic activity” posed by the coronavirus and further pledged to “act as appropriate” to keep the U.S. economy stable.
  • Some experts are skeptical any action from the central bank can stem market fallout from the coronavirus; Mohamed El-Erian, chief economic advisor for Allianz, told CNBC on Thursday that “markets will start freezing up even if the Fed cuts rates, which I think they will.”
  • National Economic Council director Larry Kudlow on Tuesday told CNBC that the virus is unlikely to become a full-fledged economic crisis, and described this week’s sell-off as a good buying opportunity. That same day, however, the CDC warned that the American public should brace for major disruptions from the coronavirus.
  • Among the stocks that have been hard hit this week are Apple (which is now flirting with bear market territory after falling 20% off its record highs) and American Airlines, which fell more than 25% this week.

Tangent: Hundreds of companies, from Apple and Nike to Starbucks and Microsoft, have issued warnings that the coronavirus will impact financial results for the first quarter and beyond. In a note on Wednesday, investment banking giant Goldman Sachs revised down its estimate for U.S. corporate earnings in 2020, forecasting 0% earnings growth for 2020 as a result of the outbreak.

Chief critic: “Markets are much too negative on the coronavirus. . . . The market was too expensive earlier in the year, but the coronavirus panic is overdone,” says Vital Knowledge founder Adam Crisfaulli. He points out that though the economic and corporate earnings fallout from the coronavirus will be severe, economic activity in China is normalizing, and that should help the bulk of the fallout remain confined to the first quarter.

Crucial quotes: “The global stock sell-off is showing no signs of slowing down,” says Edward Moya, senior market analyst at Oanda. He predicts the major indexes could “easily” enter bear market territory, though “expectations are still pretty high that the market will eventually snap back.”

“It has been a brutal week,” says Mark Freeman, chief investment officer at Socorro Asset Management. He expects a further sell-off next week, as investors wait to see how the situation evolves and how the Fed will respond, but says that “it is too early for the Covid-19 crisis to have a material impact on [U.S. economic] data.”

“This week reminded many investors of 2008, which isn’t a happy memory,” says Ryan Detrick, senior market strategist for LPL Financial. “Nonetheless, remember that the overall economic backdrop is still healthy in the U.S., but when fear grips, that doesn’t matter.”

“The impact to the economy will be severe, but not enough to create a recession (e.g., two consecutive quarters of negative growth),” says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “It is the uncertainty that is most difficult to price in, so people are selling in the advance of concrete information.”

Crucial statistic: The benchmark U.S. ten-year Treasury yield hit a new bottom on Friday, falling below 1.12%.

Key background: Stock market losses accelerated after the CDC confirmed the first case of “community transmission” of the coronavirus in Sacramento, California. Globally, more than 83,700 people have been infected as of Friday, with more than 2,800 dead. Earlier this week, Italy, South Korea and Iran emerged as new coronavirus hot spots outside of China, causing further concern that the outbreak will spread to other major economies. The World Health Organization said on Friday that the virus now poses a “very high” risk at a global level.

Follow me on Twitter or LinkedIn. Send me a secure tip.

I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an intern at Forbes in 2015 and 2016. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com

Source: The Stock Market Is In Free Fall On Coronavirus Fears. How Much Worse Will It Get?

Investors are on the retreat world-wide as fears of the coronavirus deepen. Supply chains are starting to falter and tourists are staying home. The virus is also sparking the sell-off of pandemic bonds. As the business community struggles to predict the coronavirus’ economic fallout, observers warn the virus could be the final blow that throws the world economy into recession. The Dow Jones had its worst one day point drop in history, tumbling almost 4 and a half percent. That sentiment spilled over to Asia with Tokyo’s Nikkei shedding 3 point 6 percent today. And Hong Kong’s Hang Seng also closed down 2 point 4 percent. Subscribe: https://www.youtube.com/user/deutsche… For more news go to: http://www.dw.com/en/ Follow DW on social media: ►Facebook: https://www.facebook.com/deutschewell… ►Twitter: https://twitter.com/dwnews ►Instagram: https://www.instagram.com/dw_stories/ Für Videos in deutscher Sprache besuchen Sie: https://www.youtube.com/channel/deuts… #Coronavirus #dwNews
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