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AMC Rally, Jobless Claims and David Beckham - What's Moving Markets

EconomyJun 03, 2021 05:16AM ET
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© Reuters

By Peter Nurse

Investing.com -- AMC Entertainment continues to post staggering stock gains. However, crude oil and Wall Street have paused recent positive runs ahead of a data deluge, headed by U.S. jobless claims numbers. Meanwhile, the electric car market has received a celebrity backer. Here's what's moving markets on Thursday, June 3rd.

1. Onward and upward for AMC Entertainment 

There appears to be no stopping AMC Entertainment (NYSE:AMC).The stock of the movie-theatre chain, the new darling of the Reddit community, is pointing firmly higher again premarket Thursday, after doubling in value during Wednesday’s session and surging more than 400% in the last two weeks alone.

Its market capitalization has soared to $33 billion during this period, surpassing other so-called meme stocks - not bad for a company that was on the brink of bankruptcy at the start of the year.

However, handing out treats like popcorn and special screenings hasn’t changed the economic reality surrounding the company. 

The pandemic has caused its long-term debt levels to soar to $5.4 billion as of the first three months of this year from less than $2 billion in 2016. And it’s still losing money, with analysts expecting another $100 million to go over the next 12 months.

Sure customers may well come back as the U.S. fully reopens, and its new AMC Investor Connect initiative may help on the margin, but there’s good reason to think the pandemic has permanently changed viewing habits. The media giants spending vast sums on buying streaming services certainly think so.

AMC’s stunning climb has certainly rewarded investors who bought in early, but how long can this last?

2. Stocks to edge lower

U.S. stocks are set to open marginally lower Thursday, continuing the muted start to the new month, ahead of a deluge of important economic data.

By 6:30 AM ET, Dow Jones futures were down 60 points, or 0.2%, at just over 34,500, S&P 500 futures were 0.2% lower and Nasdaq 100 futures dropped 0.2%.

The major indices closed marginally higher Wednesday--with the broad-based S&P 500 up just 0.1%, the blue chip Dow Jones Industrial Average gaining just 25 points, and the tech-heavy Nasdaq Composite adding 0.1%--maintaining the week’s holding pattern ahead of Friday’s crucial jobs report.

These averages remain close to record highs but the market has lost a lot of its earlier momentum amid worries that a stronger-than-expected economic rebound will result in higher inflation and thus sooner-than-expected monetary policy tightening.

Companies like online office tool DocuSign (NASDAQ:DOCU), group messaging app Slack Technologies (NYSE:WORK), athleisure wear maker Lululemon Athletica (NASDAQ:LULU) and chipmaker Broadcom (NASDAQ:AVGO) are due to report Thursday. But a lot of the attention will be on the meme-stocks, like AMC Entertainment (see above), Bed Bath & Beyond (NASDAQ:BBBY) and Workhorse (NASDAQ:WKHS), which continue to pound higher.

3. Data deluge

The U.S. economic slate is packed Thursday, providing investors with fresh clues on the pace of recovery in the world's largest economy, as well as signs of higher inflation at a time when investors are worried about an early tightening of monetary policy.

First off the blocks is the ADP jobs number, at 8:15 AM ET (1315 GMT), which is expected to say the economy added 650,000 private sector jobs in May, a slight slowdown from the 742,000 which were added in April. 

The weekly initial jobless claims data follows 15 minutes later, with expectations calling for a number of 390,000 claims for the week ending May 28, an improvement from the 406,000 the previous week and a new post-pandemic low.

These numbers will be studied carefully ahead of Friday’s official employment report, particularly after the disappointing April release of 266,000 nonfarm payrolls.

“We expect [the] … payroll numbers to be much stronger than in April, with the drop in initial claims indicating a monthly increase of possibly as much as 1.5-2 million (current consensus is for 672k),” said analysts at Nordea, in a note.

Also due for release is the May ISM non-manufacturing PMI, at 10 AM ET, which is expected to show renewed confidence in the vital services sector, but could also indicate rising wages pressure. 

The news from Europe was positive, as business activity in the Eurozone surged in May as the easing of some coronavirus related restrictions injected life into the bloc's dominant services industry.

Additionally, Britain's services sector recorded the biggest jump in activity in 24 years last month, after pubs and restaurants were allowed to resume serving customers indoors following months of lockdown.

4. Crude takes a breather

Crude oil prices edged lower Thursday, with traders banking some gains with the market earlier climbing to record levels amid growing optimism of a strong recovery in demand from China, the U.S. and Europe.

By 6:2 0AM ET, U.S. crude was down 0.2% at $68.69 a barrel, after earlier climbing to its highest level since October 2018. Brent was down 0.2% at $71.22, after closing above $70 for two consecutive days for the first time in more than two years.

Confidence is flooding into the oil market that demand will surge in the second half of the year as the major oil consuming nations fully reopen as they gain control of the Covid-19 pandemic.

Earlier this week, Saudi Energy Minister Prince Abdulaziz bin Salman said the demand picture has shown signs of improvement, in the wake of the meeting of the Organization of the Petroleum Exporting Countries and other top producers, including Russia, a group known as OPEC+. Additionally, International Energy Agency’s Fatih Birol said he sees a robust consumption recovery in the next six months.

This rebalancing, after the sharp pandemic-led slowdown in demand last year, will be led by resurgent demand in the United States, the world's biggest oil user, from vehicle consumption this summer, along with rising fuel needs in China, the world's second biggest oil consumer, and in Europe, and the U.K. in particular, as the region exits the lockdowns.

U.S. crude oil supply data from the American Petroleum Institute, released late Wednesday, showed a draw of 5.360 million barrels for last week, a substantial increase from the 439,000-barrel draw recorded during the previous week.

Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.

5. Celebrity e-car backer

The electric car market received celebrity backing Thursday, as it was announced that soccer star David Beckham has taken a 10% stake in Lunaz, a U.K.-based car restoration and electrification company.

The deal value was not disclosed, but Beckham will join Lunaz's founders and the Barclay, Reuben and Dellal families as a shareholder, the company said on Thursday.

The electric sector is making steady inroads in Europe, with European consumers buying more than half a million electric cars for the first time in 2020, despite the pandemic. That is expected to double to one million sales in 2021.

Germany is by far the biggest single market, with 64,700 sold in the first quarter of 2021, while the U.K. overtook France to become Europe’s second largest electric car market in the first quarter of the year.

Of course these numbers are still dwarfed by the sales of traditionally-fuelled cars, but the trend is clear and Norway last year became the first country in the world where more electric cars were sold than fossil fuel cars, thanks to generous subsidies.

 

 

AMC Rally, Jobless Claims and David Beckham - What's Moving Markets
 

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Comments (6)
Larry DeAngelis
Larry DeAngelis Jun 03, 2021 7:43AM ET
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The move down is because the fed announced it is selling its stocks it bought during the pandemic used to prop up the market. Further proof these are not free markets anymore! Maybe they can get a low commission rate from Goldman for all the inside info they supplied them prior to making it public.
Malarlibe Emma
Malarlibe Emma Jun 03, 2021 7:43AM ET
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Malarlibe Emma
Malarlibe Emma Jun 03, 2021 7:43AM ET
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so hw will I do it
Matt Kay
Matt Kay Jun 03, 2021 7:43AM ET
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If fed starts selling their purchased bonds we will see 50% drop not 50 basis point drop.
Alan West
Alan West Jun 03, 2021 7:43AM ET
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The Fed doesn’t own stocks. Only bonds.
Matt Kay
Matt Kay Jun 03, 2021 7:30AM ET
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Spoos down 50 basis! BTFD!!! Oh wait, that does not even erase the gains from the last two days.I bet we will be green once the manipulated jobless numbers come out. Printer continues to BRRRRR
Shimon Knijnik
Shimon Knijnik Jun 03, 2021 7:11AM ET
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BB to 50$ 🚀🚀📈🙌🙌
Malarlibe Emma
Malarlibe Emma Jun 03, 2021 7:11AM ET
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hw far
Alex Jordan
Alex Jordan Jun 03, 2021 6:14AM ET
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How can i invest
Malarlibe Emma
Malarlibe Emma Jun 03, 2021 6:14AM ET
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hw far
John Klan
John Klan Jun 03, 2021 6:14AM ET
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put as much into a good 401 k plan as you can every week. Thank me ten years from now.
Hung Pham
Hung Pham Jun 03, 2021 6:14AM ET
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John Klan yeah if you want to be average American then keep investing in 401k lol
Hunter Stoehr
Hunter Stoehr Jun 03, 2021 6:00AM ET
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#amc500k 🙌💎🦍🚀
Kenneth Dobrowolski
Kenneth Dobrowolski Jun 03, 2021 6:00AM ET
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🤣🤭😹🙊I’ll be more than happy ro join they apes in the continued run up on $AMC. But, I wouldn’t hold the stock, due to the fact that amc was on the brink of bankruptsey just a few short months ago, and will owe another 100 million by the end of the year. Free popcorn won’t bring in enough traffic to pay off their enormous debt.
Vishal Dhanavani
Vishal Dhanavani Jun 03, 2021 6:00AM ET
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They have raised more than $1.5Bn in cash reserve, to rule out bankruptcy until the end of 2022, even without anymore income coming in.AMC will definitely face challenges to turn the business around for long term but they are in no immediate danger anymore and now with all this publicity, who knows they may have just scored the perfect support for their business.Also, their stock price has nothing to do with the fundamental business. Its all about the imminent short squeeze and removing institutional corruption from the system. I suggest you do some more research into this whole AMC / meme stocks movement.
Yaxshilikov Javoxir official
Yaxshilikov Javoxir official Jun 03, 2021 5:50AM ET
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ozbekcha yozing
 
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