Stocks stumbled Thursday as the weekly batch of jobless claims data arrived. Suffice to say, the numbers pertaining to last week were terrible, showing 2.44 million American workers filing for initial unemployment benefits.
Source: Provided by Finviz
- The S&P 500 lost 0.78%.
- The Dow Jones Industrial Average dropped 0.41%
- The Nasdaq Composite fell 0.97%
- Recently resurgent Disney (NYSE:DIS) succumbed to some profit-taking today, becoming the Dow’s worst offender.
Over the course of the novel coronavirus pandemic, investors have become accustomed to Thursday misery from the weekly jobless claims data, but the markets don’t always respond in kind. There have been days when stocks were drubbed on the claims data and others when equities rallied in spite of bleak numbers. Not-terrible losses put today somewhere in the middle.
The other source of pressure on equities today was the once again-eroding relationship between the U.S. and China. In a rare display of bipartisanship, the Senate easily passed a bill, which could bar Chinese companies from listing on traditional U.S. exchanges, if it were to be passed.
As a result, reports surfaced that Baidu (NASDAQ:BIDU), the largest internet search company in China, is mulling pulling its shares from the Nasdaq and pursuing a listing closer to home.
In late trading, 23 of 30 Dow stocks were in the red, but each of the losers was off by less than 3%.
Yes, Really: Good News for Boeing
Boeing (NYSE:BA) was the Dow leader after RBC analyst Michael Eisen initiated coverage of the aerospace stock with an “outperform” rating and a $164 price target.
Perhaps even more helpful to the Boeing stock cause today were comments from Southwest Airlines (NYSE:LUV) CEO Gary Kelly. At the airlines’ annual shareholders meeting today, Kelly said he’s hopeful the carrier can get its fleet of grounded Boeing 737 Max jets airborne again by the fourth quarter. That’s big news because Southwest is the largest 737 Max customer.
More Reasons to Love Apple
Already one of this year’s best-performing mega-cap names, Apple (NASDAQ:AAPL) still has ways to entice investors beyond the iPhone. An emerging theme for Apple is its services business and that segment’s growth could be spectacular.
In a note out today, Evercore ISI analyst Amit Daryanani detailed how Apple services could eventually be a $100 billion business unto itself. Though putting $100 billion into context, that number is still much less than the current market capitalization for fellow Dow tech stock International Business Machines (NYSE:IBM).
“Higher services mix should push gross margins higher and help smooth cyclicality. In addition, Apple continues to build its base of subscription services, which helps make the case for a higher multiple given the recurring nature of the cash flows…Net/net, services remains an underappreciated growth lever especially given the shift in growth towards monetization and subscription based model,” said Daryanani.
Ominous Dividend Call
The Dow is home to four financial services stocks, three of which closed lower today amid speculation that bank dividends are in danger. That trio includes JPMorgan Chase (NYSE:JPM) and American Express (NYSE:AXP), though the latter isn’t a traditional bank.
Kristalina Georgieva, managing director at the International Monetary Fund, said in an opinion piece that the $250 billion banks spent on dividends and buybacks last year would be better used to bolster their capital positions. For its part, JPM already nixed its share repurchase plan earlier this year.
Travelers (NYSE:TRV) was the lone Dow financial stock in the green today because it’s an insurance company and because, well, it already boosted its dividend this year.
Bottom Line on the Dow Jones Today
Given the past weeks of terribly unemployment numbers, we can easily surmise that when the May jobs report is delivered on the first Friday of June, it will be horrific. Perhaps not as bad as the 20.5 million jobs shed in the month of April, but the May number is still smoothly sailing into “ugly” territory.
Under some rosy estimates, 80% of the jobs lost due to the coronavirus pandemic will return. The issue there is two-fold. First, anything less than 100% is disappointing and bad for workers and the economy. Second is the length of time it will take for those jobs to come back.
Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.
