US stocks struggle as American job destruction accelerates: April 3, 2020

US oil prices skyrocketed by a record 32% this week on relief over signs that major powers could finally restrain production.

Crude surged another 12% Friday to finish at $28.34 a barrel on news that OPEC+ will meet via video conference Monday. The summit, designed to halt the historic collapse in prices, could include other producers outside of the alliance.

The rally added to Thursday's stunning 25% spike after President Donald Trump said he hopes and expects a massive production cut of 10 million to 15 million barrels per day from Saudi Arabia and Russia.

Analysts said Trump's claim is unrealistic because such deep production cuts would need to include other countries, perhaps including the United States.

The weekly spike of 32% is the strongest since oil futures began trading on NYMEX in 1983.

Yet the oil crash has been so deep that crude remains down more than 50% on the year.

We've already seen how much of a negative impact the coronavirus pandemic has had on the job market and broader economy. Next up? Corporate America will start to report earnings for the first quarter in the coming weeks. The numbers are not going to be good. Scratch that. Let's be blunt. They are going to be awful.

According to estimates from FactSet Research, profits for companies in the S&P 500 are expected to plunge 7.3% in the first quarter compared to a year ago.

The forecast for the second quarter is even more bleak, with analysts projecting a staggering 15.1% drop. That would rival the worst performance for companies since the 15.7% drop during the third quarter of 2009 -- the end of the Great Recession.

Analysts have slashed their earnings estimates most severely in the energy, consumer discretionary and industrial sectors, with profit forecasts falling sharply for Exxon Mobil (XOM), Chevron (CVX), General Motors (GM), Ford (F) and Boeing (BA).

Communication services and technology could be among the few bright spots in the market though, thanks to continued expectations for strong earnings growth from the likes of Facebook (FB) and Google owner Alphabet (GOOGL).

FactSet said that analysts are also predicting a more modest drop in earnings for the third quarter of 4.8% and that profits will rebound slightly in the fourth quarter. But considering how rapidly things are changing, those predictions may turn out to be overly optimistic.

Sales at the Cheesecake Factory (CAKE) fell 46% in March compared to a year ago, the company revealed in a regulatory filing.

The ongoing coronavirus pandemic has forced restaurants to close their dining rooms and quickly pivot to takeout or delivery.

In slightly better news, the Cheesecake Factory said those sales grew 85% compared to its previous quarter. Its restaurants are "operating sustainably at present under this model," the company said.

Last week, Cheesecake Factory announced that it wasn't paying April rent. Shares are flat Friday.

Now here's a brave company for you. Bitoech Zentalis Pharmaceuticals, which is developing treatments for various types of cancer, went public Friday. And it's off to a great start.

Shares of Zentalis (ZNTL), which listed on the Nasdaq, surged nearly 40% to about $25 a share in early trading. And that's after the company raised the size of its offering and priced the IPO at $18 -- the top end of its expected range.

Zentalis is the first IPO of a US-based firm since the coronavirus pandemic ground economic activity in America to a halt and sent the stock market into a free fall.

The IPO market has slowed to a virtual standstill in recent weeks as a result of the Covid-19 outbreak. The only other company to test the public waters in the US lately was WiMi Hologram Cloud, a Chinese augmented reality firm that debuted Thursday. Shares of WiMI (WIMI) have fallen slightly below their offering price.

But it's still unclear whether highly touted US unicorn companies -- firms like Airbnb, DoorDash and Robinhood -- will be able to go public this year.

People are chowing down on stacks of pancakes at IHOP. But they're not eatin' good in the neighborhood as much at Applebee's.

That's why one money manager wants Dine Brands, the company that owns both chains, to consider spinning off IHOP.

Dine Brands (DIN) disclosed in the proxy statement for its upcoming shareholder meeting on May 12 (which it may hold virtually because of coronavirus) that proposal from activist investment firm JCP Investment Partnership.

JCP says IHOP, which reported rising same-store sales in 2019, would be better off without Applebee's, which posted a decline in sales last year.

JCP pointed out that two other restaurant firms, Brinker (EAT) and Darden (DRI), have fared much better after they got rid of struggling brands. (Private equity firm Golden Gate Capital bought On the Border Mexican Grill and Cantina from Brinker in 2010, and scooped up Red Lobster from Darden in 2014.)

"We believe that a standalone IHOP would be valued and classified as a growth company, which would allow IHOP to trade at a materially higher multiple," JCP said.

Dine Brands is recommending that shareholders vote against the proposal, arguing it would limit the company's ability to keep paying a dividend and buy back stock.

Shares of Dine Brands have plunged 75% this year even though most of its restaurants remain open and are offering more delivery services due to Covid-19.  

US stocks had a volatile morning, as investors came to grips with a worse-than-expected March jobs report.

The three major US indexes opened modestly lower, and they even turned green over the course of the morning. But by midday stocks were sharply lower, driven by losses in energy and utility shares.

The coronavirus crisis is hurting America's economy and it's starting to show up in the data. Economists expected to see a sharp downturn in the services sector last month, but that didn't happen.

The Institute of Supply Management's non-manufacturing PMI for March surprised on the upside at 52.5 points, versus 44 points expected. Any number above 50 denotes an expansion.

Still, it was a steep decline from February's 57.3 number, and the lowest read since August 2016.

Across sectors, survey respondents noted the devastating impact from the coronavirus outbreak on their businesses, demand and supply chains. As with so much other economic data, the non-manufacturing PMI will likely look worse in the months to come.

The government's new Small Business Administration (SBA) Paycheck Protection Program is meant to help with emergency funds -- but JPMorgan Chase and Capital One (JPM) say they can't accept loan applications just yet.

JPMorgan, the largest bank in the United States as measured by assets, said "financial institutions like ours are still awaiting guidance from the SBA and the U.S. Treasury. As a result, Chase will most likely not be able to start accepting applications on Friday, April 3rd, as we had hoped."

"We will help you, our customer, with getting access to these emergency funds," the bank continued on its Chase for Business website. "And we will make it as easy as possible for you to get these funds quickly. We hope to have the guidance we need from the government soon so that we can begin assisting you."

Capital One (COF) also said late Thursday that it's unable to take PPP loan applications as of yet, adding that any small businesses who apply will probably need to be current Capital One customers as of February 15.

Other big banks that CNN Business spoke with said they were also eager to take part in the SBA's PPP initiative. But many stressed that they are already making other loans, waiving fees and taking other steps to help small-merchant clients.

US stocks kicked off modestly lower on Friday, as investors digested a worse-than-expected March jobs report.

In premarket trading, stock index futures came off their lows following the report, as much of the bad economy news is already priced into stocks.