Market Recap: Thursday, May 7

All three major indices closed in the green, with the NASDAQ up for the year ahead of Friday's jobs report. Yahoo Finance Live's panel discusses the day's market action.

Video Transcript

JEN ROGERS: Welcome back to Yahoo Finance. We are just seconds away from the closing bell. We are green across the board. We're going to see if the NASDAQ can hold onto these gains here that put it up for the year. It's going to be a close call, as we've lost a little bit of steam here heading into the close.

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972 is the level, and it looks like we have the NASDAQ up for the year on a day when we got another seven-figure claims report here-- 33 million claims since the coronavirus outbreak. S&P 500, every day this week, has had less than a 2% range. First time Jared Blikre pointing that out to us since the COVID sell-off. Again, we're going to have green here. The Russell also up, crude ending just a touch lower here.

A number of big movers today include some of those names that we reported on after hours yesterday-- from the class of 2019 IPOs, names like Peloton and Lyft. I'm not sure if I should say better than expected or just better than feared. People were really worried, at least on the Lyft number, what that was going to look like. And it met investors' expectations. Uber is going to report after the bell today and also Roku. Myles Udland, of course, will be sorting through all of those earnings.

Andy Serwer, what do you think of the fact that here we are-- the NASDAQ is actually up-- is up, in the green for the year. We are awaiting what is going to possibly be the worst jobs number that we've seen tomorrow. The labor picture just keeps getting bleaker and bleaker. And the NASDAQ is up for the year. How does this make sense?

ANDY SERWER: The jobs number tomorrow, by the way-- I'll just start with that-- that's not going to be just the worst jobs number, I hope, of your lifetime, but probably of your parents' lifetime as well. Because you have to go back to the 1930s and '40s. In fact, some people are anticipating the number being even worse than that-- a 16% unemployment rate, 20-plus million jobs lost. I mean, so it's huge.

So why the disconnect between the stock market? Well, I ranted about this yesterday, Jen. I won't repeat myself, but the stock market is all about the haves. And increasingly in this world, we're seeing this bifurcation between the haves and have nots in our society, wealth and income inequality, but also in business. And there are companies that are doing OK or even benefiting during this time of coronavirus, and then there are all the others.

And all the others included what used to be some healthy businesses, of course, like airlines, for instance. But the haves-- the companies that are doing OK-- are the FAANGs and those other companies-- the second-tier techs we were talking about yesterday. And you mentioned, well, was it better than expected or better than feared? Really, Jen, I think the way to look at it is it's better than the other guys. And so that's what they're better than.

And I think this-- you know, just one last point-- so you're paying money to Netflix. You're paying money to Etsy to buy masks. You're paying-- all the companies that you're still paying money to, those are the companies you should consider as investments. And the companies that you're not paying money to right now, you might not want to be investing in-- at least for the time being.

JEN ROGERS: The shape of this recovery has so much to do, I think, with how long people are going to be paying to some of these companies right now. So maybe Etsy's seeing great movement on masks here, but if people are out of work for an extended period of time-- and, Rick Newman, I want to bring you in here on this. That's going to eventually-- doesn't that eventually knock all companies? Look at Indeed, the job posting service-- so this doesn't have to just do with people that are getting laid off-- postings right now are down about 39% year over year.

That's about people getting jobs back. And people are very optimistic right now that they're going to get those jobs back. But if they don't, won't that eventually hit some of the winners that Andy is talking about?

RICK NEWMAN: I think it will. I mean, imagine people who are paying for a couple of streaming services, which are obviously doing great right now. But now you've been out of work not two months, not three months, maybe longer, and it starts to look like it's not a temporary furlough, it's a permanent job loss. You're going to start cutting back every place you can. I think markets think that's not going to happen.

The market right now is not in early May. I would say the market's sort of in early July. And the market is anticipating that two months from now, let's say, things are going to be coming back to normal-- not all the way back to normal, but we're going to be making consistent progress back towards something that looks like normal. And there's a good chance markets are wrong. Markets just do not seem to be pricing in any chance of a resurging virus, even though we know that outside the Northeast, COVID-19 cases are actually going up-- they're not going down.

And they're probably going to go up more as-- you know, a number of states now are relaxing their work at home restrictions-- Florida, Texas, South Carolina, Georgia, Colorado. And the more people get together, the more that case count is just going to go up. So if we see backsliding here in terms of the virus itself, infections and death rates nationally, and then the effect on the economy, such as new rounds of closures, I think that is a significantly negative scenario for the markets.

ANDY SERWER: Let me jump in, Rick. I don't disagree with you when it comes to some of these companies are going to be feeling the hurt. It's going to obviously be a hierarchy and a culling of the herd even amongst those "have" companies that I was talking about. So the best of them will continue to succeed. But you're right-- the weaker ones will eventually, of course, be hurt.

But I want to take issue a little bit with something you said about the markets, because, you know, the markets is the FAANGs, right? I mean, you really need to look at the difference between those market indexes and the overall economy. It's so weighted towards those things. So, like, the market's ahead of itself. The market increasingly just reflects those big, big tech stocks. That's my point, I guess.

RICK NEWMAN: I think you're right. And I think-- the way I think of this is break companies down into three or four buckets. The most important bucket, or the one we're talking about, the companies you know will still be standing when this is over, and that's the FAANGs, for sure-- the digital infrastructure. And then the companies that will probably be standing, then the ones that are in some peril, and then the ones that are imperiled right now-- that's some of the retailers. For example I would put the airlines in my third bucket, which is they're in peril. They'll probably survive in some form, but they're in peril. And we can see that happening every day. So I totally agree with your hierarchy.