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Stocks gave back morning gains in late Thursday trade as investors grew skeptical about the specifics of a claim by President Donald Trump that Saudi Arabia and Russia have forged a deal to substantially curb oil production to stabilize prices.
A tweet from the president on the possibility of a big reduction in oil production by some of the industry’s giants helped to briefly overshadow data that showed U.S. weekly jobless claims soared to a record.
Thursday’s volatility followed a poor start to the second quarter on Wednesday as investors weighed bad news on the public health front and the economy against hoped-for fiscal stimulus as a result of the global COVID-19 pandemic.
What are major indexes doing?
The Dow Jones Industrial Average DJIA, +0.99% was about 43 points, or 0.2%, higher at about 20,988, but had hit an intraday peak at 21,477.77, while the S&P 500 SPX, +1.09% was about 12 points, or 0.5%, higher at 2,418. The Nasdaq Composite Index COMP, +0.59% hung around the flat line at 7,357, but had been up at 7,501.
What’s driving the market?
Oil and oil-related stocks have been a focal point for markets that have been battered by a pandemic.
Stocks surged mid-morning Thursday after Trump tweeted that he had spoken to the leaders of both oil-producing countries, and expected them to cut production by about 10 million barrels a day.
However, commodity experts raised doubts that such a reduction, which Trump at one point said could top 15 million barrels a day, was practical.
“It’s physically impossible for Saudi Arabia and Russia to get 10 million barrels a day off the market—they’d burst their onshore storage and fill every ship in sight,” Edward Marshall, a commodities trader at Global Risk, was quoted as saying by the Wall Street Journal.
The price war, which started in March, pushed crude oil to lose nearly two-thirds of its value in the first quarter, and has slammed the energy sector. The U.S. benchmark CL.1, +22.50% slumped to an 18-year low and dipped intraday below $20 a barrel. Shares of Exxon Mobil Corp. XOM, +6.09% and Chevron Corp. CVX, +9.80% were both up sharply after the announcement but remain roughly 40% lower for the year to date.
Trump’s tweet also comes a day before the president is scheduled to meet with U.S. oil-company executives on Friday at the White House to discuss possible aid for the industry amid the plummeting oil prices. Exxon Chief Executive Darren Woods, Chevron’s Chief Executive Mike Wirth, Occidental Petroleum’s OXY, +18.95% Chief Executive Vicki Hollub, and Continental Resources CLR, +10.84% Chief Executive Harold Hamm, are expected to be in attendance, according to the Wall Street Journal.
Moves for the market come as investors wrestle with grim economic news. Some 6.65 million Americans filed for first-time jobless benefits, doubling the previous week’s record rise of 3.28 million the previous week. Previously, the record first-time claims number was below 700,000.
In a separate report, the government also said that the U.S. trade deficit narrowed to $39.9 billion in February from $45.5 billion in January.
Countless businesses across the country have been forced to close or scale back hours, throwing masses of people out of work and triggering an unprecedented back-to-back surge in initial jobless claims.
In just the past two weeks alone, new claims have easily exceeded the peak number of people who collected benefits during the 2007-09 recession. At the end of the last recession, 6.6 million people drew benefits, a record at that time.
“The economy is in bad shape and doubts are growing that the recent fiscal rescue package to help businesses might not be enough to keep people on their payroll,” said Edward Moya of brokerage Oanda. “It is unfortunate how bad these numbers are getting, and no one will be surprised if we see a few more terrible readings over the next few weeks. America needs the economy to reopen, but not at the cost of lives.”
What are other markets doing?
Oil prices perked up, with the price of a barrel of West Texas Intermediate Crude CLK20, +22.50% for May delivery rising 19.5% to $24.26 a barrel on the New York Mercantile Exchange.
Government bond yields ticked down, but offer earlier lows, with the benchmark U.S. 10-year Treasury note TMUBMUSD10Y, +8.15% down by about 2 basis points to 0.61%.
Gold charted another gain on safe-haven demand, with the precious metal for June delivery GCM20, +2.90% jumping up by $46.30, or 2.9%, to settle at $1,637.70 an ounce.
The dollar traded 0.3% higher compared with a basket of currency trading partners, as gauged by the ICE U.S. Dollar index DXY, +0.58%.
Which companies are in focus?
Walgreens Boots Alliance Inc. WBA, -7.83% on Thursday reported quarterly results that beat expectations but said it would hold off on issuing full-year guidance. Shares were down 8.3% on Thursday.
Boeing BA, -6.49% is offering buyout and early retirement packages to employees as it works to combat the impact on its business of the coronavirus that causes COVID-19 that has grounded airlines around the world and decreased demand for new planes. Shares were down 7.4%.
General Electric Co. GE, -2.63% shares were down 3.1% after investment bank UBS cut the conglomerate’s price target.
U.S. Bancorp USB, +1.28% shares ticked 0.6% higher after a price-target cut from Deutsche Bank.
Shares of Shake Shack Inc. SHAK, -3.38% fell 4.4% after the company said same-store sales fell by nearly a third in March compared with a year ago.
CarMax Inc. KMX, -4.42% shares tumbled more than 4.2% as the company said it had beat expectations in the quarter, before the coronavirus hit in March.
Related: American businesses are tapping their credit lines at the fastest pace ever
