US stocks snap 2-day losing streak: April 2, 2020

By CNN Business

Updated 6:18 a.m. ET, April 3, 2020
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10:55 a.m. ET, April 2, 2020

Oil skyrockets 35% after Trump suggests huge cuts by Saudi Arabia and Russia

From CNN Business' Matt Egan

The oil market is going wild after President Donald Trump suggested Saudi Arabia and Russia could reach a truce that would slash production by 10 million barrels per day.

US crude skyrocketed as much as 35% to $27.39 a barrel Thursday morning after Trump's tweet.

"I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!" Trump tweeted.

Crude was recently trading up 28% to $26 a barrel.

Oil prices crashed to 18-year lows earlier this week in part because Russia and Saudi Arabia are flooding the market with cheap oil at the worst possible time.

A deal to end that price war and instead reduce production would be a big positive for the depressed oil market.

However, it's weak demand -- not excess supply -- that's the primary cause of the oil crash. The extreme health restrictions imposed to fight the coronavirus pandemic has caused an unprecedented collapse in oil demand.

That means even if there is a truce between Saudi Arabia and Russia, oil prices could remain under pressure.

1:18 p.m. ET, April 2, 2020

PepsiCo is spending $45 million on coronavirus relief efforts around the globe

From CNN Business' Chauncey Alcorn

PepsiCo is adding millions of dollars to the fight against coronavirus.

The food and beverage maker announced it is setting aside a total of $45 million to fund Covid-19 relief efforts around the world.

In a written statement, Pepsi (PEP) said a total of $15.8 million will be spent on US coronavirus aid. Most of that money will fund meals for low-income children, but some will pay for protective gear for medical staffers and financial support for laid off restaurant workers.

An additional $29.2 million will go to relief efforts in Europe, Asia, Africa, and Latin America.

“We’re activating our global resources to do this now and provide other essential relief, and we will continue to do so as the world unites to tackle COVID-19,” PepsiCo Chairman & CEO Ramon Laguarta said in a written statement. 

10:38 a.m. ET, April 2, 2020

Here's why the Fed just changed the rules for America's big banks

From CNN Business' Matt Egan

The Federal Reserve really wants America's big banks to help fight the coronavirus crisis.

The Fed announced a rule change late Wednesday aimed at giving big banks like JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) the ability to ramp up lending and smooth out turbulence in the Treasury market.

The US central bank will now exclude US Treasuries and deposits left at the Fed from how supplementary leverage ratios are calculated.

In theory, that should give banks more flexibility to make loans and act as market makers.

Banks are getting flooded with deposits from Americans nervous about the pandemic.

That influx forces lenders to set aside ultra-safe assets they can quickly sell in case they were faced with heavy withdrawals, particularly in a bank run. And that leaves banks with less space to make much-needed loans to cash-strapped consumers and businesses.

It also limits big banks' ability to act as market makers -- a critical role given recent turmoil in the Treasury market.

"Liquidity conditions in Treasury markets have deteriorated rapidly," the Fed in a statement.

KBW analyst Brian Kleinhanzl said the rule change shows the Fed "views the largest banks as 'solutions' within the current crisis and not 'causes.'"

12:27 p.m. ET, April 2, 2020

Luckin Coffee plunges on accounting probe news

From CNN Business' Paul R. La Monica

It was only a few days ago that the stock of Luckin Coffee (LK), China's answer to Starbucks (SBUX), was soaring on hopes that the Chinese economy was recovering.

But Luckin dropped a bomb on investors Thursday, disclosing in an SEC filing that the company was looking into possible accounting fraud that artificially lifted sales.

Making matters worse, Luckin indicated that its COO Jian Liu was involved in helping to fabricate transactions. Shares were down more than 75% in late morning trading.

Read more about the Luckin accounting probe here.

9:48 a.m. ET, April 2, 2020

Markets swing all over the place after horrific jobless claims report

From CNN Business' Matt Egan

Wall Street is attempting to shrug off a startling spike in jobless claims.

US markets opened flat, traded higher and then moved into the red Thursday morning.

The very choppy action comes after a new report showed initial unemployment claims skyrocketed to record highs because of the coronavirus pandemic.

The Dow dropped 120 points, or 0.6%.

The S&P 500 fell 0.2%.

The Nasdaq lost 0.4%.

Markets were poised for a strong rally before 8:30 am ET. That's when the Labor Department said 6.6 million people filed claims for initial unemployment benefits in the week ended March 28. That shatters the previous record of 3.3 million the week before.

The dreary labor news is another reminder of the severe shock the health crisis is delivering to the American economy.

8:56 a.m. ET, April 2, 2020

Ross Stores is furloughing a majority of its 93,000 employees

From CNN Business' Jordan Valinsky

Discount retailer Ross Stores (ROST) is putting a "majority" of its employees on furlough beginning Sunday.

The company employs 92,500 people across its 1,546 stores in 39 states, according to regulatory filings. Affected employees will still continue to receive their company-funded healthcare.

Ross stores are closed and it's unclear when they will reopen. In a press release, the company said that furloughs will help it "further enhance liquidity and strengthen its ability to manage through these challenging times."

8:55 a.m. ET, April 2, 2020

This week's jobless claims shattered last week's historic record

From CNN Business' Anneken Tappe

Millions more Americans filed for unemployment benefits last week, as businesses continue to lay off and furlough workers amid the coronavirus outbreak.

6.6 million workers filed for their first week of unemployment benefits in the week ending March 28 -- a new historic high. A week earlier, 3.3 million Americans filed for their first week of benefits, which was the largest number ever at the time.

It was the highest number of initial claims filed in history, surpassing last week’s 3.3 million claims.

8:32 a.m. ET, April 2, 2020

Oil pops after Trump says Russia and Saudi Arabia could soon end their epic battle

From CNN Business' Matt Egan

Oil prices spiked off 18-year lows Thursday after President Donald Trump predicted Saudi Arabia and Russia could soon make peace in their disastrous oil war.

US crude soared more than 10% to $22.50 a barrel on hopes the two nations will stop flooding the market with cheap oil.

Brent, the world benchmark, also climbed 10% to $27.30 a barrel even though no deal has yet been announced.

Trump said Wednesday that he believes "Russia and Saudi Arabia are going to make a deal at some time in the not-too-distant future."

"It's very bad for Russia. It's very bad for Saudi Arabia. It's very bad," the US president said of the oil crash.

Trump raised the issue with Russian President Vladimir Putin in a phone call earlier this week. The two leaders agreed to hold further talks.

But even if Russia and Saudi Arabia agree to supply cuts, it won't solve all that ails the oil market. Beyond the excess supply, the biggest problem is that coronavirus travel restrictions have caused unprecedented declines in demand for oil.

And that's something that not even Trump and Putin can solve overnight.

8:16 a.m. ET, April 2, 2020

Stocks poised to open higher ahead of unemployment data

From CNN Business' Anneken Tappe

US stock futures are pointing to a higher open on Thursday.

But before the opening bell rings, the Department of Labor is releasing initial jobless claims for the week ended March 28. It's looking to be another one for the history books, with the consensus estimate at 3.5 million people filing for unemployment benefits. That would outpace last week's historical record of nearly 3.3 million.

But last week, stocks shrugged off the dramatic data point and rallied, proving that the market has already priced in much of the bad news to come.

Dow futures are up 1.9%, or nearly 400 points. S&P 500 futures are also 1.9% higher, while those for the Nasdaq Composite are up 1.6%.