Stocks closed higher on Thursday, largely driven by President Donald Trump’s tweet about the possibility of a massive reduction in oil production ahead. Investors put their hopes on this prospect, expecting oil prices to stabilize in the coming weeks. The president’s tweet also helped investors ignore the record number of Americans applying for unemployment benefits in the week ended Mar 28.
The three major indices closed in the green on Thursday. The Dow Jones Industrial Average closed at 21,413.44 after gaining 2.2%, the broader S&P 500 reached 2,526.90 after adding 2.3% and the tech-laden Nasdaq Composite closed at 7,487.31 after gaining 1.7%.
The fear-gauge CBOE Volatility Index (VIX) gained 1.1% to close at 51.49 on Apr 2. Finally, advancers outnumbered decliners on the NYSE by a 2-to-1 ratio.
Trump Moderates Oil Production Cut
Oil and related stocks surged around mid-morning on Apr 2, following a tweet by the President that said that he had spoken to Saudi Arabian Crown Prince Mohammed bin Salman, who, in turn had exchanged dialogue with Russia’s President Vladimir Putin. Trump said that he expects Saudi Arabia and Russia to slash their oil production by 10 million barrels a day or even more.
Oil prices had suffered severely since the pandemic confined people to their homes worldwide and shuttered down businesses and industries. The U.S. benchmark West Texas Intermediate had slumped to an 18-year low in March.
Trump is scheduled to meet executives of U.S. oil giants on Apr 3 at the White House. The President is set to discuss potential support for the industry amid the bottoming oil prices.
Following Trump’s tweet, shares of oil companies Exxon Mobil Corporation XOM and Chevron Corporation CVX rose 7.7% and 11% on Apr 2. Exxon Mobil sports a Zacks Rank #3 (Hold) while Chevron carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Jobless Claims Surge to a Record High
The total number of weekly jobless claims rose to a record 6.65 million in the week ended Mar 28, a level quite unimaginable even a month ago. The advance figure for seasonally adjusted initial claims stood at 6,648,000, as 3,341,000 more claims were added from the revised level of the week ended Mar 21.
According to the U.S. Department of Labor, this level marks the highest of seasonally adjusted initial claims in the history of the seasonally adjusted series. The weekly claims data indicates toward the hard-hit economy as businesses and industries are closed because of the coronavirus outbreak in the country.
New Orders for Manufactured Goods Decline
According to the U.S. Census Bureau, new orders for manufactured goods in February decreased $0.1 billion. The decline in February was followed by a 0.5% decline in January. Shipments of manufactured durable goods were down for two consecutive months, decreasing 0.2% to hit $500.3 billion.
Inventories of manufactured durable goods in the said month declined as well. The figure stood at $434.5 billion after decreasing $0.1 billion. Unfilled orders, however, increased in February. Unfilled orders increased 0.1% to reach $1,158.6 billion.
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