Stock market live Tuesday: Dow up 100, weak final hour, oil surges 20%

U.S. equities climbed on Tuesday thanks to investor optimism about states’ progress to reopen parts of their economies. California will permit clothing stores, bookstores and flower shops to reopen for curbside pickup as soon as Friday while New York plans to ease restrictions on manufacturers, construction and select retailers next week. Stocks sensitive to reopening efforts — such as Starbucks and Marriott — outperformed on Wall Street. Here’s what happened:

• The Dow gained 133 points, 0.56%, its second positive session in a row.   
• Dow Impact: UnitedHealth had the most positive impact on the Dow, adding 38 points to the index.       
• The S&P 500 gained 26 points, 0.90%, its second positive session in a row.   
• SPY Impact: Apple had the most positive impact on the SPY, adding 0.22 points to the ETF. 
• The Nasdaq Composite gained 98 points, 1.13%, its second positive session in a row.    
• The Nasdaq 100 gained 1.09%, its fourth positive session in five.        
• The Russell 2000 gained 0.75%, its second positive session in a row.   
• DJ Transports gained 0.83%, breaking a three-day losing streak.     
• 10 of 11 S&P sectors were positive in Tuesday’s session, led by Health Care, up 2.15%. Financials was the laggard, down 0.07%. — Hayes

U.S. equities closed in positive territory on Tuesday but well of their highs, after losing steam in the final hour of trading. The Dow Jones Industrial Average rose 133 points, after being up 419 points at its high of the day. The S&P 500 rose 0.9% and the Nasdaq Composite gained 1.13%.Ten out of eleven sectors closed in the green. —Fitzgerald 

Stocks lost a bit of stream following comments from Federal Reserve Vice Chairman Richard Clarida that the economy needs more support to rebound. “More policy support will be needed from the Fed and possibly also fiscal policy. It just depends on how this evolves,” Clarida said. Clarida said that the Fed will continue to provide whatever support is necessary to support markets and the economy. “Our policies we think will be very important in making sure that the rebound will be as robust as possible. We’re in a period of some very, very, very hard and difficult data that we’ve just not seen for the economy in our lifetimes, that’s for sure,” Clarida said. — Fitzgerald 

With about 30 minutes left in the trading day, stocks cut some of their earlier gains. The Dow Jones Industrial Average was up about 200 points. The S&P 500 rose about 1.2%. Shares of the major U.S. banks fell into negative territory. — Fitzgerald 

Shares of large technology stocks fueled the market’s rally on Tuesday, extending the group’s recent gains. Shares of Microsoft rose 2%, making its gain for the week nearly 5%. Apple rose 2.3%, bringing its rally to 3.7% since Monday. Amazon jumped 0.7% on Tuesday and Facebook ticked 1.7% higher. Shares of Netflix were slightly in the red but the stock is up nearly 3% this week. — Fitzgerald 

Parsley Energy CEO Matt Gallagher said on CNBC’s “Power Lunch” that while “we have definitely seen a demand bottom … the industry is definitely not out of the woods yet.” Oil jumped more than 20% on Tuesday in its fifth straight day of gains, but prices are still roughly 60% below where they were at the start of the year. “Even a recovery to the mid-$20s is not sufficient for the majority of operators to continue on,” Gallagher said, adding that if oil stays at depressed levels for the coming months “there’s going to be a lot of damage and a lot of triage going on across the industry.” – Stevens

Oil prices rose on Tuesday, fueled by optimism around an uptick in demand as worldwide economies reopen, as well as ongoing production cuts. West Texas Intermediate, the U.S. benchmark, gained $4.17, or 20.45%, to settle at $24.56, while international benchmark Brent crude settled 13.86% higher at $30.97 per barrel. “One thing is clear, the demand bottom is behind us, and this is manifesting in oil prices which are on the rise,” said Per Magnus Nysveen, Rystad Energy’s head of analysis. – Stevens

Expectations that the U.S. economy will soon reopen put the major averages on pace for sharp gains with roughly one hour left in the trading session. The Dow traded more than 300 points higher, or 1.5%, while the S&P 500 jumped 1.8%. The Nasdaq Composite advanced more than 2%. Tuesday’s gains put the major averages up more than 14% each over the past month. The Nasdaq was also less than 1% from turning positive year to date. —Imbert

The S&P 500 is up more than 30% from a March 23 low and JPMorgan strategist Nikolaos Panigirtzoglou thinks there are several factors underpinning the bullish sentiment in stocks. Some of those include the massive liquidity injections by the Federal Reserve and expectations that the economy will soon reopen. Another factor driving the market’s bullish stance is “the presence of an equity short base and equity underweights among investors.” Panigirtzoglou noted that “markets are still pricing in weak economic recovery as evidenced by still depressed dividend futures prices in equities and high credit spreads in HG and HY.” He also pointed to the “rapid healing of credit markets” as another underpinning factor for the market. —Imbert

Shares of Uber and Lyft gave up earlier gains following news that California Attorney General Xavier Becerra and several cities are suing the transportation companies. The lawsuit alleges that the companies have wrongly categorized drivers as contractors. Uber last traded 0.7% higher for the day, while shares of Lyft were flat. —Pound, Feiner 

Shares of Chegg have surged more than 35% on Tuesday after beating Wall Street expectations for the first quarter. The education company reported earnings of 22 cents per share on $131.6 million in revenue on Monday night. Analysts expected 15 cents per share on $122.7 million, according to Refinitiv. Raymond James upgraded the stock to outperform after the announcement, citing strong growth for the company’s subscription product. —Pound

About three stocks advanced for every decliner at the New York Stock Exchange as hopes of reopening the economy lifted the broader indexes. Overall, 2,055 NYSE-listed stocks traded higher while 785 declined, according to FactSet data. —Imbert

• Starbucks — Shares of the coffee chain climbed after its CEO unveiled a plan to reopen 85% of its U.S. stores.
• Harley-Davidson — The motorcycle maker saw its shares rise after Argus Research upgraded it to buy from hold. The analyst said the upgrade reflects “our positive view of the company’s new strategic plan” which could “result in a solid recovery for Harley as the economy restarts.”
• Norwegian Cruise Line — Shares of the cruise operator tanked after the company warned of a potential bankruptcy, noting there’s “substantial doubt” about its ability to rebound from the coronavirus crisis.

Read more here. —Imbert

Deutsche Bank analyst Lloyd Walmsley hiked his price target on Alphabet to $1,700 per share, implying an upside of more than 28% from the stock’s previous close of $1,322.90 per share. “We think investors underestimate how disciplined the company can be on costs, both pre-COVID and coming out of COVID,” Walmsley wrote in a note to clients, calling Alphabet his “favorite mega cap tech idea.” Alphabet shares have been on fire over the past month, surging nearly 25%. —Imbert, Bloom

The major averages traded near their session highs at midday as investors plowed into stocks on hopes the U.S. economy will soon reopen. The Dow traded 400 points higher, or 1.7%. The S&P 500 gained 1.8% while the Nasdaq advanced 1.9%. Crude also gave equities a boost, trading more than 18% higher in its fifth straight day of gains. — Imbert

Consumer debt swelled to a new record in the first quarter, hitting $14.3 trillion amid rises in student and auto debt. A decline in credit card debt helped offset some of the total as consumers began adjusting to the economic slowdown brought about by the coronavirus. The new total eclipses the previous record, set in the third quarter of 2008, by $1.6 trillion, according to the New York Federal Reserve. — Cox

Shares of Disney rose 1.7% in early trading despite being downgraded from neutral to sell by LightShed Partners’ Richard Greenfield. The stock has been downgraded by several Wall Street analysts, including Michael Nathanson on Monday, as the economic restrictions from the coronavirus pandemic hit several of Disney’s business lines. The company is set to report earnings for its fiscal second quarter after the bell. — Pound 

Norwegian Cruise Line announced it received an injection of liquidity from private equity on Tuesday morning and, according to Goldman Sachs, it should allow the company to start sailings again. “While we expect demand to be solid, we see limitations from potential impacts to the addressable market (CDC advises older passengers to avoid sailing – link), and to each ship’s occupancy levels given likely social distancing standards (we estimate 50%-60% occupancy through 2021), though changes to these assumptions could drive meaningful upside/downside to our estimates,” Goldman analyst Stephen Grambling said.

The firm said it was keeping its neutral rating and $15 price target on the stock. Norwegian was the single-worst performer in the S&P 500 Tuesday morning, down 20%. — Bloom

Activities in the services sector went into a tailspin in April amid nationwide lockdowns aimed at containing the coronavirus. The ISM nonmanufacturing index dropped to 41.8 in April from 52.5 in March, showing the first contraction in services since December 2009. It was also the biggest contraction for the sector since March 2009, when the index hit 40. Anthony Nieves, chair of the Institute for Supply Management, said the massive month-over-month drop “was primarily a product of supply problems related to the coronavirus (COVID-19) pandemic.” — Li, Imbert

• BMO upgraded L Brands to outperform from market perform.
• Argus upgraded Harley-Davidson to buy from hold.
• Rosenblatt initiated Salesforce as sell.
• Atlantic Equities downgraded Wells Fargo to underweight from neutral.
• Canaccord initiated DraftKings as buy.
• Bank of America downgraded Tyson Foods to neutral from buy.
• Deutsche Bank raised its price target on Alphabet to $1,700 from $1,625.
• LightShed Partners downgraded Disney to sell from neutral.

— Bloom

Energy stocks including major oil and gas drillers and refiners led the broader stock market higher on Tuesday. The S&P 500 energy sector rose 3.5% and helped carry the S&P 500 up 1.5% within the first half hour of the regular session thanks to a 16% rally in WTI futures. All of the S&P 500 sectors rose and gains in big chipmakers like Lam Research and Applied Materials and retailers like Kohl’s and Starbucks outperformed the broader market. The Dow was last seen up 350 points (1.45%) while the Nasdaq Composite added 1.66%. — Franck

A shocker cold spell in the Eastern U.S., combined with massive drilling cutbacks, boosted natural gas prices above a key level, and some traders say it could break out more. Natural gas futures soared above $2 per unit traded Tuesday after edging near that level Monday. The June contract was trading at $2.10, a five-month high. According to U.S. government weather data, high temperatures in the northeastern quarter of the country are expected to be 10-to-15 degrees below normal during the next two days, with cooler temperatures in the upper Ohio River valley, central Appalachians and Mid-Atlantic. Weathermodels.com forecasts temperatures as much as 20 degrees below normal over the next 10 days. Natural gas had already begun to move higher on the steep cutback in oil drilling, which reduced the amount of associated gas as well. The total rig count, or number of oil and gas wells in production, has fallen from 1,051 to 435 over the past year. — Domm

The Dow Jones Industrial Average jumped 230 points, nearly 1%, to start Tuesday’s session as optimism about gradual U.S. state reopenings sent investors into risk assets. Stocks of companies that would see much better business with reopenings — such as American, United and Delta Airlines — led the way, each up more than 3.5%. Starbucks rose more than 3% as its CEO said some 85% of its U.S. company-operated locations would be open by week’s end. — Franck

Oil prices jumped on Tuesday, lifted by hopes of a coming recovery in demand as economies around the world reopen. West Texas Intermediate, the U.S. benchmark, rose 13% to trade at $23.25 per barrel, while international benchmark Brent crude gained 7.8% to trade at $29.32. Both contracts are on pace for their fifth straight day of gains. President Donald Trump cheered the move higher, tweeting “Oil prices moving up nicely as demand begins again!” — Stevens

Starbucks stock climbed nearly 4% in premarket trading after CEO Kevin Johnson said that over 85% of its U.S. company-operated locations will be reopened by the end of the week. The coffee chain said it plans to have more than 90% of cafes open by early June with limited hours and operational changes in light of the ongoing Covid-19 pandemic. — Franck

Shares of Norwegian Cruise Line dropped more than 10% in the premarket after the company said there is “substantial doubt” about its ability to move forward from the coronavirus pandemic as its impact on the cruise operator is beyond containment. The virus “is expected to continue to impact our results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price,” Norwegian Cruise Line said, noting it expects to report a loss for the first calendar quarter and for 2020. Norwegian shares are down more than 75% for 2020. —Imbert

More states are beginning to relax social distancing guidelines as the growth in coronavirus cases appears to slow. Indiana, Kansas and Missouri this week have begun various degrees of first-phase reopening. California is projecting to start the second phase of its normalization that will see “low-risk” businesses able to come back, along with expansion of curbside options for other businesses. Confirmed coronavirus cases in the U.S. rose by 1.9% Monday, the first sub-2% growth day since the crisis started, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics. Shepherdson points out that Germany began relaxing its social distancing measures when it reached 2.9% case growth, and is now headed toward “de minimis” gains, or less than 100 per day, by May 25. –Cox

Investors added individual stocks to their portfolios last week and were net sellers of ETFs as they become more selective in their bets of an economic reopening, data compiled by BofA Securities showed. The data showed the bank’s clients bought individual stocks in nine of the 11 S&P 500 sectors, led by near-record inflows into health care. That sector, BofA Securities says, has seen inflows in 13 of the past 14 weeks. Consumer discretionary and tech rounded out the top three sectors in terms of inflows. —Imbert, Bloom

Stocks poised to benefit from government officials allowing business to reopen were outpacing the broader market in premarket trading. Casino stock Wynn Resorts gained 4.7%, while shares of movie theater chain AMC rose 4.2%. In the retail sector, shares of Simon Property Group surged more than 4%, while Macy’s rose 3.8%. —Pound

Shares of big cap technology companies rose again on Tuesday in premarket trading, continuing their recent strength. Shares of Microsoft jumped 1%, shares of Apple rose 0.8%, Amazon jumped 0.5%. Google-parent Alphabet rose 0.5% and Facebook rose nearly 1%. Streaming giant Netflix ticked 0.75% up in premarket trading. On Monday, strength in the biggest technology companies lifted the broader market out of negative territory. —Fitzgerald

Airline stocks were up during premarket trading as they tried to curb a three-day losing streak. American shares traded 4.7% higher along with United. Delta was up 3.5% before the bell. Airlines fell broadly on Monday after Warren Buffett said he sold his entire stake in the space following steep losses from the coronavirus pandemic. —Imbert

Pharmaceutical giant Pfizer on Tuesday announced that the first human participants in the U.S. have received a dose of its potential Covid-19 treatment, BNT162. Pfizer first gave its vaccine, which compels cells to build antigens via messenger RNA, to participants in Germany late last month. The U.S. trial will test adults between the ages of 18 and 55 in its initial stage before graduating to older groups; Pfizer says it hopes to test up to 360 people. Pfizer shares rose 1.8% in premarket trading following the company’s announcement. —Franck

U.S. stock futures jumped on Tuesday morning as investors increased bets that the global economy would soon reopen. Dow Jones Industrial Average futures traded 235 points higher, or 1%. S&P 500 futures gained about 1% while Nasdaq 100 futures traded 1.1% higher. California Gov. Gavin Newsom said Monday some of the state’s retailers will be allowed to offer curb-side pickup starting Friday. New York Gov. Andrew Cuomo said that the daily number of hospitalizations and new deaths are declining, suggesting the state is on “the other side of the mountain.” Equity futures also got a boost as oil prices traded higher for a fifth straight day. —Imbert

— With reporting from Michael Bloom, Jesse Pound, Patti Domm, Yun Li, Lauren Feiner, Pippa Stevens and Jeff Cox. 

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