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Thomas Hughes

The U.S. Equities Move Higher

U.S. equity futures are higher in premarket trading after another volatile overnight session. Down more than 200 points at one time the Dow is now indicated to open higher by 3.20%. The NASDAQ leads early gains with an advance of 3.55% after hitting the limit-up 5% barrier earlier in the electronic session. The S&P 500 trails with a gain of 2.65% but is still moving higher for the second day. This makes the first two-day advance in many weeks and may signal a bottom has been reached.

Now that lawmakers are close to passing a sweeping spending bill to keep the U.S. economy afloat traders will be turning to the data. The first indications of economic impact came this week with the Empire State Index and jobless claims. The Empire State Index fell to -21.5%, its lowest recording ever, while jobless claims surged by 70,000. Next week, investors should be alert for another massive uptick in jobless claims that may top the 1 million mark.

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Virus Threat Is About To Peak

California took bold steps to contain the spreading coronavirus. The governor ordered citizens to stay at home for two weeks effectively shutting the entire state down. Essential services will still function but business activity will come to a standstill. The number of cases is now over 253,000 globally with more than 10,000 dead. The U.S. has over 14,000 cases with 216 dead. Globally, more than 89,000 have fully recovered.

WTI is rebounding in early trading. The price for black gold is up more than 7.0% on Friday after posting its biggest one-day surge on Thursday. Thursday action has energy prices up nearly 20% at the high of the day. Although a good sign for the energy sector, prices remain low at $25.32 and are unlikely to stage a major rally until after the viral threat has passed. When the virus passes the demand for oil will spike and may cause WTI and Brent to move sharply higher.

Quadruple Witching To Drive Price Action

Today is quadruple witching, an event that may spark volatility in today’s trading. Quadruple witching is when equity options, single-stock futures, index options, and index futures expire on the same day. With the market having undergone a correction, and with high-volatility, there is likely to be a bit of unwinding for traders to do.

Stocks on the move include Tiffany, Nike, Tesla, and Walmart. Tiffany reported better than expected earnings on strong comps. LVMH, who recently agreed to buy Tiffany & Co, says it may choose to buy the stock on the open market. The stock is trading well below the agreed-upon price providing quite an opportunity for savings.

Nike got an upgrade from Bank of America. BoA analysts see the company gaining market share in the viral environment. Tesla says it will close two more plants in the fight to contain the virus. Musk says the company should have enough cash to weather the storm. Walmart, contrary to expectations for massive layoffs elsewhere in the economy, is planning to hire another 150,000 people to handle the viral-driven demand.

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