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Day Ahead: Top 3 Things to Watch for April 5

Published 04/05/2020, 22:33
Updated 04/05/2020, 22:45
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By Kim Khan 

Investing.com - Stocks ended the day in the green as investors managed to shake off worries about potential U.S.-China battles, which could take months to materialize, if at all.

Tomorrow investors will get some more concrete data on the damage done by Covid-19 as the latest services activity figures are reported.

On the heels of Star Wars Day, there will be earnings from Disney , a company the sell side is very pessimistic about near term.

And there will be more on oil inventories for all those with supply jitters.

Here are three things that could move the markets tomorrow.

1. Historic Services Drop Seen

Data from the services sector highlights the economic calendar tomorrow, with activity in the largest segment of the economy expected to fall to its lowest level ever after the lockdown measures.

The Institute of Supply Management will release its April non-manufacturing purchasing managers’ index (PMI) at 10:00 AM ET (14:00 GMT).

The ISM services index is expected to have plunged to 36.8 last month from 52.5 in March.

That would be below the all-time low for the index of 37.3 set in 2008 during the Financial Crisis.

2. Disney Facing ‘Perfect Storm’

Walt Disney (NYSE:DIS) leads the earnings parade tomorrow, with the company facing unprecedented effects from the Covid-19 pandemic on nearly all fronts.

Wall Street is concerned, with five downgrades on the stock coming in the past month, including today when Moffett Nathanson downgraded shares to neutral from buy, citing an “unrivaled earnings risk for the foreseeable future.”

On April 20, UBS cut the stock to neutral from buy and its price target to $114 from $162. The company is in the “eye of the storm” of the pandemic and theme parks likely won’t open until 2021, while Disney’s exposure to live sports will hit advertising hard, UBS analyst John Hodulik said.

Disney reports after the bell tomorrow, with analysts predicting a profit of 94 cents per share on revenue of about $18 billion, according to forecasts compiled by Investing.com.

Also reporting after the bell will be Beyond Meat (NASDAQ:BYND), while DuPont (NYSE:DD) issues numbers ahead of trading.

3. API Stockpiles on Tap

Oil prices settled higher today, with WTI moving firmly above $20 per barrel. But analysts noted there are concerns about when the numbers in inventories and production cuts will start justifying the sharp recent rise.

Tomorrow the American Petroleum Institute will issue its snapshot of weekly U.S. oil inventories after the bell.

The API oil numbers have been a pretty good guide lately of what to expect from the official government numbers that arrive the next day.

Last week’s numbers showed a build of 10 million barrels in crude.

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