US stocks and oil rebound after historic meltdown: April 22, 2020

By CNN Business

Updated 7:16 p.m. ET, April 22, 2020
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4:03 p.m. ET, April 22, 2020

Stock snap two-day losing streak

From CNN Business' Anneken Tappe

US stocks snapped a two-day losing streak and finished higher on Wednesday.

Investor sentiment received a boost from additional stimulus measures passed by the Senate and a rebound in oil prices, even though the factors that depressed markets earlier in the week persist. The oil market remains broken amid weak demand and storage problems, while coronavirus continues to weigh on corporate earnings and economic data.

3:16 p.m. ET, April 22, 2020

Dow rallies more than 500 points

From CNN Business' Anneken Tappe

With less than an hour left in the trading day, stocks are rallying.

The Dow is up 530 points, or 2.3%. Intel (INTC) is the index's best performer, up some 7%.

The S&P 500 is up 2.6%, with all of its sectors in the green. Technology and energy stocks are leading gains.

The Nasdaq Composite is 3.3% higher.

1:51 p.m. ET, April 22, 2020

Cash is king for companies, says venture capital veteran Alan Patricof

From CNN Business' Anneken Tappe

Investing in early stage companies comes with its own risks. Doing so during a global pandemic and recession? Even riskier.

"Cash is king, moreso than it normally is," said veteran venture capitalist Alan Patricof, co-founder and managing director of Greycroft, on the CNN Business' digital live show Markets Now.

If a company doesn't have about six months of cash on hand it might run into liquidity issues, Patricof said.

In theory, the current economic and market conditions should mean that company valuations will come down, he said, making investments more attractive.

The IPO market, meanwhile, is a whole different beast, he added.

The window for companies to go public is anything but open at the moment, Patricof said, and the IPO market will likely follow the stock market in its recovery.

1:51 p.m. ET, April 22, 2020

Stocks and oil have a lot of uncertainty ahead

From CNN Business' Anneken Tappe

Both the stock and commodities markets have a lot of uncertainty ahead over the summer as the effects of the coronavirus crisis and other fundamentals play out.

"What the oil market is telling us that consumer demand has simply evaporated," said Alicia Levine, chief strategist at BNY Mellon Investment Management, on CNN Business' digital live show Markets Now. That demand won't be coming back anytime soon, she added.

The market expects demand to rebound some in the second half of the year, but the immediate future is much more uncertain, Levine said.

On stocks, the big picture is that the market has rallied some 30% off its late-March lows in a matter of weeks. But, she said, the market might be getting ahead of itself.

"The market is pricing in a V-shaped recovery," Levine said. "And we think that's actually kind of questionable because we're worried about the impact of a possible second wave," of coronavirus cases.

In terms of sectors, Levine believes manufacturing will likely recover at a faster pace than consumer industries.

1:51 p.m. ET, April 22, 2020

Oil market rout will weigh on the US labor market

From CNN Business' Anneken Tappe

The oil industry employs some 10 million people in the United States. That's part of why the trouble in the oil market this week is so worrying.

"I'm worried on several levels," Diane Swonk, chief economist at Grant Thornton, told Alison Kosik on the CNN Business digital live show Markets Now. "One is, we can’t benefit from the lower oil prices because we’re sheltering in place and we’re not driving anywhere."

And there's a large spillover effect, she added, "The multiplier can be up to seven for every job lost. You can see many more jobs lost in the oil sector."

The oil market collapsed earlier this week, amid weak demand and concerns about storage capacity. Many jobs will be lost in the sector as the fundamental worries and the coronavirus crisis persists. "The multiplier can be up to seven for every job lost," Swonk said. "You can see many more jobs lost in the oil sector."

The oil industry was also the second largest category applying for government loans, she added, which speaks to just how troubled the industry is.

Over the medium term, "we're going to see lower [oil] production in the US and job losses," she added.

12:44 p.m. ET, April 22, 2020

L Brands shares plummet after Victoria's Secret deal hits a roadblock

From CNN Business' Jordan Valinsky

Sycamore Partners wants to terminate its plan to buy a majority stake in Victoria's Secret from L Brands two months after the $525 million deal was reached.

The private equity firm informed L Brands of its decision to pull out of the deal Wednesday, and it filed a lawsuit in Delaware court to validate the termination of the agreement.

The news sent L Brands (LB)' stock plunging as much as 25% before slightly recovering.

Read more here.

1:00 p.m. ET, April 22, 2020

Fox Corp.’s executives take pay cut because of coronavirus

From CNN Business' Frank Pallotta

 Jason ReedPool/Getty Images
 Jason ReedPool/Getty Images

Fox Corp.’s executives are taking a pay cut because of the coronavirus pandemic, the company's CEO Lachlan Murdoch said in a memo to employees on Wednesday. 

Lachlan Murdoch and Chairman Rupert Murdoch, COO John Nallen, Chief Legal Officer Viet Dinh and CFO Steve Tomsic will forgo their salaries through September 30.

The rest of Lachlan Murdoch’s direct executive team will reduce their pay by 50% in the same time frame. Vice presidents and higher level executives will take a 15% cut from May 1 to the end of July.

The pay cuts apply to divisions like Fox News, where Fox News Media CEO Suzanne Scott will take a 50% cut.

The pay reductions will affect roughly 700 people, the memo said.

“Together, we are navigating an unprecedented health crisis,” Murdoch said in the memo. "I want to recognize the magnificent work you are doing to keep our neighbors, friends and families informed and entertained and our company running smoothly in this unique moment in history."

Murdoch added, "Because of your effort, and the years of hard work that preceded it, we are in a strong position to weather this storm."

Other media companies like Disney have also had executives take pay cuts because of the pandemic.

12:10 p.m. ET, April 22, 2020

Another 4.2 million jobless claims are expected tomorrow

From CNN Business' Anneken Tappe

The deluge of Americans filing for jobless claims isn't over. Another 4.2 million claims for first-time unemployment benefits are expected to show up in tomorrow's economic data.

That would bring the total number of claims to more than 26 million over the past five weeks.

Since mid-March, 22 million Americans filed for benefits, accounting for roughly 13.5% of the nation's work force, as businesses shut down to limit the spread of coronavirus.

While talk of reopening the economy is growing and some states are beginning to loosen restrictions, companies continue to lay off and furlough their workers. Consumer behavior and demand has changed, and economists don't expect people to revert to old habits even after shelter-in-place orders come to an end. The hospitality and travel sectors, for example, are likely to be affected far longer than other sectors, and those jobs are unlikely to bounce back.

As if the coronavirus crisis wasn't enough, oil markets have broken down this week. Prices for the commodity are now so low that hundreds of oil companies could go bankrupt, eliminating even more jobs in a reeling US economy.

The US Department of Labor will report jobless claims for the week ended April 18 at 8:30 am ET tomorrow.

12:05 p.m. ET, April 22, 2020

Stocks are near session highs at midday

From CNN Business' Anneken Tappe

US stocks continue their rebound rally at midday, trading near the highs of the session.

Market sentiment improved today after the Senate approved more fiscal stimulus and oil prices attempted to stage a comeback.

Despite today's good mood in the market, the themes that weighed on markets at the start of the week remain in the background.

The oil market continues to struggle with low demand and limited storage capacity, which is weighing on prices. These dynamics are not expected to change anytime soon, given the lower consumption of oil during the coronavirus crisis. On top of that, companies are slashing their guidance amid the uncertainty of the outbreak while reporting the impact it has had on their businesses in the first quarter.