Wall Street rallies on coronavirus optimism: April 8, 2020

By CNN Business

Updated 6:38 a.m. ET, April 9, 2020
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3:49 p.m. ET, April 8, 2020

Tomorrow's jobless claims are expected to show another 5 million Americans out of work

From CNN Business' Anneken Tappe

It's that time of the week again: Weekly jobless claims are due Thursday.

Economists expect 5.25 million Americans filed for unemployment benefits for the first time in the week ended April 4. That would be down from 6.6 million in the prior week, but still the second-largest number on record.

"Another fresh record high in jobless claims could be the straw that breaks this recent stock market rally's back," said Edward Moya, senior market analyst at Oanda.

Jobless claims have become the most-watched economic data point. That's largely because it shows the fallout from the coronavirus pandemic on a weekly basis -- rather than just monthly.

Over the past two weeks alone, nearly 10 million Americans have filed for initial unemployment benefits. But companies are continuing to lay off and furlough workers, so the pain is unlikely to end soon.

2:44 p.m. ET, April 8, 2020

Airbus cuts back production as airlines defer deliveries

From CNN Business' Chris Isidore

European aircraft maker Airbus announced Wednesday it would cut production by about a third, as the troubled airline industry is being forced to defer deliveries due to the plunge in air traffic.

Airbus said the reduced schedule was designed "to adapt to the new coronavirus market environment." The company delivered only 122 of the 182 planes it built during the quarter because of "customer requests to defer deliveries," it said.

It will now build about 40 of the A320 each month, down from 60 per month of its best-selling single-aisle jet. The A330 will produce two a month from nine, and the A350 production has been scaled back to six a month from between nine and 10.

Airbus has temporarily halted production at numerous plants in Europe and North America due to health concerns. The reduced production schedule will be in place when the plants resume work. Rival Boeing, which reports its deliveries and orders next week, also has temporarily stopped building commercial jets as well.

More than half the 22,000 planes in the global commercial airline fleet have been grounded in the crisis, according to tracking firm Cirium, and that number is climbing as airlines slash their schedules, or cancel all flights in some cases, due to a combination of travel restrictions and passengers' health concerns.

1:23 p.m. ET, April 8, 2020

Stocks are up but we've seen bear market rallies before: JPMorgan Asset Management strategist

From CNN Business' Anneken Tappe

Stocks are up and on track for a third straight day of gains.

The S&P 500 is now up more than 20% from its low point on March 23. But is this the end of its bear market?

Not so fast. "Bear market rallies are something you see before the market recovers," Samantha Azzarello, global market strategist at JP Morgan Asset Management, told Alison Kosik on the CNN Business' Digital live show Markets Now

At the height of the 2008 financial crisis, there were 11 rallies before the market bottomed out and fully started to recover in March 2009, she said.

"We need to internalize how negative the data will be in Q2," Azzarello said. The market could drop again when the data surprises on the downside, she added.

The first data points since the coronavirus outbreak swept across America didn't look good: nearly 10 million people filed for initial unemployment benefits over the past two weeks.

But the magnitude of job losses was likely already priced in.

"What I don't think has been priced in is that negative Q2 GDP number," Azzarello said. How bad that number will be depends on how long the economy is shut down.

Negative earnings surprises aren't really priced in yet either, she said, because there is so little clarity for companies and investors. Businesses pulled their profit guidance over the past months, as they cannot predict how bad the fallout will be for them.

Still, Azzarello isn't advising clients to leave the stock market behind.

"We're advising clients to get back to plan," Azzarello said. "But have we hit the bottom? Is it time to load up on stocks ? Certainly not." If the market gyrations have changed investors' portfolios, she dded, they should get back to the allocations they intended.

1:55 p.m. ET, April 8, 2020

Fashion business could be changed forever by coronavirus fallout

From CNN Business' Anneken Tappe

The fashion industry could be altered forever following the changes it is going through because of the coronavirus outbreak.

"We had to very quickly pivot as a company," said Rebecca Minkoff, designer and co-founder of the Female Founder Collective, on the CNN Business' digital live show Markets Now.

Even though her eponymous fashion label's supply chain hasn't been affected at all, some retailers stopped honoring previously placed purchase orders.

"I think the relationship will be forever changed," Minkoff said, adding that designers might become stricter in terms of how deals with retailers are structured.

Minkoff also had to furlough some staff, but hopes to hire them back after the outbreak is over.

1:17 p.m. ET, April 8, 2020

Banks haven't done their part in small-business lending yet, former Labor Secretary says

From CNN Business' Anneken Tappe

Small businesses are hit particularly hard by the coronavirus crisis. Many are facing issues on payments, including payroll.

Many small businesses are running the risk of going down," former US Labor Secretary and author Robert Reich told Alison Kosik on CNN Business' digital live show Markets Now.

The government's economic relief package is intended to provide aid for these smaller businesses. But so far, the money hasn't gotten into the right pockets.

"This program actually relies on the big banks," Reich said, but they haven't yet done their part, he added.

Banks are saying that they haven't gotten clear instructions from the Small Business Administration and Treasury Department. Meanwhile, the SBA says banks are dragging their feet, Reich said.

"The government was not prepared, and I understand it's very hard to get these programs going," he added. "But you can’t just wave a magic wand and get money into people’s hands."

12:53 p.m. ET, April 8, 2020

Delta will stop booking middle seats

From CNN Business' Chris Isidore

Delta said it will no longer book the dreaded middle seat on flights through the end of May in an effort to allow for social distancing.

Delta said it is also pausing automatic, advance seat upgrades.

"These will now be processed at the gate – still in priority order – to allow gate agents to determine how to best seat customers while considering social distancing and aircraft weight-and-balance restrictions," said the airline.

Delta and other airlines have already been slashing schedules and reporting a low level of passenger traffic on flights. For example, Delta CEO Ed Bastian told Delta employees that it would be reducing its schedule by 80% in April due to the lack of demand, that it expects second quarter revenue to be down 90% and that on March 28, it carried only 38,000 customers, versus its normal late-March Saturday traffic of 600,000.

12:34 p.m. ET, April 8, 2020

Snap soars as #snapchatdown trends on Twitter

From CNN Business's Paul R. La Monica

If people try to post silly photos and videos to Snapchat but the service isn't working, you'd think that would be a bad thing for the stock.

Apparently not.

Shares of Snap (SNAP), the owner of the popular social media site, surged 10% Wednesday -- even as #snapchatdown was one of the top trending topics on Twitter.

People have been complaining about the app's spotty service. But Snapchat has been a market beneficiary of the "shelter-in-place" trend as more Americans stay home -- and presumably using their mobile devices even more than they were pre-coronavirus.

Snapchat shares are still down about 20% this year, however. So it can't afford to irk its youthful users too much, who have plenty of other social media options. After all, Facebook's (FB) Instagram now has nearly all the same features as Snapchat. And TikTok is taking the world by storm, too.

12:04 p.m. ET, April 8, 2020

As Bernie Sanders drops out, the Dow is on track for its best level in nearly a month

From CNN Business' Anneken Tappe

The Dow is up 2.4%, or some 530 points, around midday, climbing above 23,000 points. If the index closed now, it would be at its best level since March 13.

The Dow already climbed above 23,000 points during yesterday's session, but then lost steam into the close.

Vermont Senator Bernie Sanders announced the end of his bid for president shortly before midday. Stocks extended their gains some following the announcement, as Sanders was considered a less market-friendly candidate.

The S&P 500 was last up 2.1%, while the Nasdaq Composite rose 1.8%.

11:50 a.m. ET, April 8, 2020

Starbucks commits $10 million to workers affected by the coronavirus pandemic

From CNN Business' Danielle Wiener-Bronner

Starbucks is committing $10 million to a new Starbucks Global Partner Emergency Relief Program, which is designed to help workers who have been affected by the coronavirus pandemic, the company said Wednesday.

The fund is open to partners, Starbucks' term for employees, at both company-owned and licensed Starbucks operations around the world, and can help cover expenses for housing and utilities, sudden loss of a home, funeral expenses for the death of a family member or partner and more.

“During this very difficult time, we believe it is our responsibility to create additional support for partners facing unexpected financial hardship wherever they are," said Lucy Helm, chief partner officer for the Starbucks Coffee Company, in a statement.