US OPEN: Wall Street open higher as oil prices stabilize

 

US indices opened slightly higher today as oil prices continue to rose and investors digest another weak set of data. Jobless claims report which showed the number of Americans filing for unemployment benefits was 4.427 million last week. In total over 26 million people in the US applied for help within last 5 weeks, which is equivalent to 16% of the labor force. The coronavirus pandemic erased the 22 million jobs which were created since September 2010. The IHS Markit US Services PMI declined to 27.0 in April 2020 from the previous month's 39.8, below analyst’s estimates of 31.5. Today's reading pointed to the steepest fall in service sector activity since the series began in October 2009. The IHS Markit US Manufacturing PMI dropped to 36.9 in April of 2020 from 48.5 in March, below market expectations of 38. The reading pointed to the sharpest contraction in factory activity in 11 years. The number of reported coronavirus infections in the US is approaching 850 000 and death toll reached almost 48 000. On the earnings front, Intel, West Bancorporation and T-Mobile will post their quarterly results today.

Intel (INTC.US) is scheduled to report first-quarter 2020 earnings results today after the closing bell.  The company reported strong fourth quarter that was driven by data-center and PC demand. "In 2019, we gained share in an expanded addressable market that demands more performance to process, move and store data,” CEO Bob Swan said in prepared Q4 remarks. “One year into our long-term financial plan, we have outperformed our revenue and EPS expectations.” Intel may probably see growth in the first quarter because the widespread coronavirus pandemic has increased demand for the company's products. Many companies, schools, governments are quickly trying to equip their employees with laptops and increase cloud computing efforts because millions of people work remotely. The company's results can also be positively affected by the performance of the latest  Xeon processors and the growing popularity of IoT applications. However some investors are concerned about what the future holds once those initial purchases die down, especially as businesses try to navigate an uncertain economy.
Also the reduction in the number of PC shipments in the first quarter due to supply constraints caused by coronavirus may affect first quarter results. Therefore there is a possibility that long term investors will pay little attention to the short-term coronavirus-induced spikes while the rest of the year seems gloomy. If this is the case, then we may witness a similar situation to Netflix, whose shares fell despite the publication of better than expected data for the first quarter.
Intel shares soared recently and are up around 3% in the last 12 months. The consensus EPS Estimate is $1.20 (+34.8% Y/Y) and the consensus Revenue Estimate is $18.65B (+15.8% Y/Y). Over the last 2 years, the chipmaker managed to beat EPS estimates everytime and has beaten revenue estimates 88% of the time.

Hershey (HSY.US) recorded a quarterly profit of USD 1.63 per share, 8 cents below estimates. Revenues were also lower than analysts' forecasts. The candy maker will pay a regular quarterly dividend and confirmed that has sufficient liquidity to meet its cash needs.

GAP (GPS.US) - has suspended rent payments and is negotiating with landlords to defer or reduce rents as long as virus-related closures continues. The clothing seller also warned that the existing cash may not be enough to finance company operations.