Stock Market Live May 1: Bad Jobs News Is Good News for S&P 500 (VOO)
Key Points
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The Labor Department reported that unemployment claims are rising, and investors bet this means interest cuts are coming soon.
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More than 100 companies reported earnings this morning, but results are mixed.
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Amazon Works to Keep the Bubble Afloat
And that’s a wrap for Thursday. The market has closed, and the S&P 500 ended up hanging on to most of its gains of earlier in the day, closing up 0.6%. The Voo somehow managed to outperform the index it tracks, too, closing up 0.7% for the day.
Tomorrow we’ll see if the market can keep on rising through week-end. The good news on that front is that Amazon.com (Nasdaq: AMZN) just reported top and bottom line beats for Q1 after the closing bell, a propitious report that may help to keep the rally going tomorrow.
Steady as She Goes
In midafternoon trading both the S&P 500 and the Vanguard S&P 500 ETF are holding onto their gains of earlier in the day, up 0.9% and 1%, respectively. Helping to maintain investors’ optimism is a new report out from the U.S. Chamber of Commerce, urging President Trump to “automatically” exempt from tariffs any product that either “cannot be produced in the U.S.” or, and this could be important, is simply not available for purchase domestically.
Interest rate cuts and and end to the tariffs war? For investors, this could be like Christmas come early.
Ukraine Signs Minerals Bill
In international news, the White House confirms that it has signed an economic partnership with Ukraine — the long awaited “minerals deal.”
Among the deal’s provisions is the establishment of a United States-Ukraine Reconstruction Investment Fund to help finance mining of rare earth minerals in Ukraine, and to divide up profits between the Ukrainian government and U.S. mining companies that will assist in the extraction. Profits will help repay the U.S. for past and future military aid to the war-torn country, and also tie the U.S. more tightly to Ukraine’s success in the war, potentially giving the U.S. a greater interest in seeing that success happening, and the war ending.
Bad news for the economy may be good news for the Vanguard S&P 500 ETF (NYSEMKT: VOO), which will seek to notch its eight straight up day on Thursday after the Department of Labor reported rising unemployment in the U.S.
The Labor Department reported this morning that seasonally adjusted claims for unemployment insurance reached 241,000 last week, higher than the expected 225,000 and up 18,000 from the previous week. Continuing unemployment benefits claims rose to 1.92 million and are at their highest levels since November 2021.
Bad news? It sure sounds like it. But a weakening economy boosts the chances the Federal Reserve will cut interest rates, and investors see that as good for the stock market. As a result, the S&P 500 opened 0.9% higher this morning, and “the Voo” is up a solid 1%.
Earnings
We’re in the heart of earnings season right now, with more than 100 companies reporting their Q1 profits this morning. Winners today include Estee Lauder (NYSE: EL), Becton Dickinson (NYSE: BDX), and Moderna (Nasdaq: MRNA), and Hershey (NYSE: HSY), all S&P 500 components and all reporting earnings beats.
Losers include Eli Lilly (NYSE: LLY), McDonald’s (NYSE: MCD), and Southern Company (NYSE: SO), all with earnings misses.
Analyst Calls
Speaking of misses, Caterpillar (NYSE: CAT) won an upgrade to outperform from Oppenheimer this morning, despite yesterday’s earnings miss. “While the global macro outlook is likely to remain a near-term overhang, CAT’s better than feared quarter highlighted relative resiliency of the demand and margin outlook,” said the analyst.
Conversely, Redburn-Atlantic downgraded Procter & Gamble (NYSE: PG) stock to neutral because: “After a stellar seven-year period where Procter & Gamble (P&G) grew organic sales and reported EPS ahead of peers, growth is now slowing – primarily a function of market dynamics.”
So I guess a lousy economy isn’t always good news after all.
© General Photographic Agency / Hulton Archive via Getty Images
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