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Stock Market Wrap-Up: Newmont Looks Golden; Will AMC Avoid Bankruptcy?

By Dan Caplinger - Apr 9, 2020 at 5:04PM

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The stock market finished a remarkable holiday-shortened week.

The stock market is closed Friday for the Good Friday holiday, but investors made the whole week a good one, with continued gains in Thursday's trading session. Further stimulus measures from the Federal Reserve gave investors more confidence in the strength of the financial system, and that lifted many large bank stocks to lead the market higher. The Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC 1.05%) once again outpaced the Nasdaq Composite (^IXIC 0.90%), but all three indexes finished in the green.

Today's stock market

Index

Percentage Change

Point Change

Dow

+1.22%

+286

S&P 500

+1.45%

+40

Nasdaq Composite

+0.77%

+63

Data source: Yahoo! Finance.

Interestingly, some safe-haven plays are also doing well, even with the stock market rising. Many have seen gold-mining giant Newmont (NEM 2.51%) as traditionally offering investors protection from market uncertainty, but soaring gold prices lifted its stock, even on a good day for the broader market.

For AMC Entertainment Holdings (AMC -0.15%), however, the situation is more dire. Some investors are wondering whether the movie-theater chain will be able to survive the coronavirus-imposed closures that have forced its business to play a costly waiting game.

Newmont looks shiny

Shares of Newmont jumped 13% as investors reacted favorably to good news in the gold market. Positive comments from analysts also played a role in lifting sentiment about the mining stock.

Gold prices rose sharply on Thursday, climbing more than $35 per ounce to finish at above the $1,680 per-ounce mark. Futures prices also climbed, sending the precious metal to levels it hasn't seen since the early 2010s. The Fed's stimulus plan injected another $2.3 trillion of liquidity into the financial markets, and gold traders have traditionally reacted skeptically to central bank efforts to rely too much on monetary policy to achieve economic goals.

Gold bullion bars next to a chart with a yellow line going up.

Image source: Getty Images.

For Newmont, in particular, positive comments from JPMorgan also helped. Analysts there argued that the mining giant would be able to fund its own capital expenditure budgets even if gold fell 25% or more from current levels, while still being able to pay its dividend to shareholders. Weighing in with an overweight rating and a price target of $61 per share, JPMorgan believes that Newmont is in a better position than some of its gold stock rivals to keep replacing its gold reserves and maintain production.

If gold's bull market continues, then Newmont stands to do well. That's good news for shareholders, regardless of what happens with the rest of the stock market.

Can the show go on?

Elsewhere, AMC Entertainment Holdings saw its stock drop 21%, reversing gains from earlier in the week. Investors now appear more concerned than ever that the movie-theater operator could have to resort to bankruptcy in order to make it through several more months of closures stemming from the coronavirus pandemic.

Analysts at MKM Partners added to the chorus of Wall Street pessimists about AMC's prospects, cutting its rating on the movie theater chain to sell and setting a price target of just $1 per share on the stock. MKM said that it thinks theaters will have to remain closed until August, at the earliest, and it doubts that AMC has the cash and financing capacity to bridge that gap without filing for bankruptcy protection.

Already, the movie-theater operator has taken extraordinary steps to conserve cash. Recent moves include telling its landlords that it needs to stop paying monthly rent on theater space beginning in April, as well as signaling its intent to seek specific federal aid to help it and other ailing theater companies.

Analysts at Loop Capital also downgraded AMC stock on similar comments on Wednesday. Unless theaters can open sooner than expected, it's going to be tough for AMC to pull out of its tailspin and deliver a Hollywood ending for its shareholders.

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Stocks Mentioned

Newmont Mining Corporation Stock Quote
Newmont Mining Corporation
NEM
$61.17 (2.51%) $1.50
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$13.53 (-0.15%) $0.02
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,825.33 (1.05%) $39.95
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,127.85 (0.90%) $99.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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