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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10:38 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%.

8:37 a.m. ET, April 2, 2020

CarMax says used car demand has 'progressively deteriorated'

From CNN Business' Paul R. La Monica

Demand for used cars was very strong at CarMax earlier this year. The dealer said Thursday that sales rose nearly 15% in the three month period that ended in February. Earnings topped forecasts too.

But that was before the coronavirus became a huge problem for America's economy. Stores (including some CarMax dealerships) throughout the country have shut down and many consumers have resorted to online shopping. That's bad news for CarMax.

The company said in its earnings report that it had strong sales in the first week of March too but that since then "sales have dropped significantly."

"Over the past few weeks, approximately half of our stores have closed or are running under limited operations. For our stores that are open, consumer demand has progressively deteriorated," the company added.

Investors seemed to be focusing on the positive though. CarMax (KMX) shares rose nearly 5% in early trading. The broader market was higher too.

But CarMax CEO Bill Nash, like many other corporate executives, was not afraid to say he has no idea what's coming next. That's one reason why the stock is still down about 40% so far this year.

"The situation is dynamic and changing quickly, making it difficult to predict what the immediate future holds," Nash said in the earnings release.

7:48 a.m. ET, April 2, 2020

American and Southwest draw down $5 billion on lines of credit

From CNN Business' Chris Isidore

The nation's airlines are preparing to file for $50 billion in federal assistance to help see them through the coronavirus crisis. But they're also turning to lines of credit they arranged from major banks to provide them with the cash they need.

American Airlines disclosed in a filing that it had drawn down $2.7 billion on Wednesday from three revolving lines of credit that it had agreed to between 2013 and 2016. Southwest disclosed it drew down $2.3 billion from a recent credit line. The airline also confirmed it would file for help from the federal government.

The economic rescue package passed by Congress last week provides for $25 billion in grants and $25 billion in borrowing assistance for the nation's passenger airlines. The number of passengers going through TSA screening at US airports has fallen by 93% compared to a year ago, leaving them with virtually no revenue coming in.