Stocks pared losses but opened lower. Stocks will try to add to their recent advance after the S&P 500 Index’s biggest weekly gain in over 40 years. Coming back from the holiday weekend, and with markets throughout much of Europe closed for the holiday, the morning session has been fairly calm. Investors will remain focused on signs of a peak in COVID-19, treatment development, the latest stimulus measures, and unfolding plans to potentially begin reopening the economy in May. Earnings season kicks off Tuesday.
OPEC reaches a deal to cut production. OPEC leaders and Russia reached a deal over the holiday weekend to cut production after getting remaining holdout Mexico onboard. The move will help offset the severe global demand shock from the COVID-19 pandemic, which was exacerbated by a Saudi Arabia-led global price war, but it may fall well short of the eventual hit to demand from travel restrictions and lockdowns. We think oil could eventually get to where it is economical for US producers to produce—in the $40s and $50s per barrel—but it may take a long time to get there.
Earnings season begins this week. First quarter earnings season kicks off this week with several big banks reporting first quarter results. Due to COVID-19 pandemic, S&P 500 earnings are expected to fall 10%, compared to estimates at the start of the year that called for a 4% increase. This week 40 S&P 500 companies will report quarterly results. We preview earnings season later today on the LPL Research blog.
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