The Dow Jones Industrial Average (^DJI 0.16%) was in rally mode Wednesday, up roughly 2% at 10:45 a.m. EDT. The gains come as the economic damage from the novel coronavirus pandemic becomes clearer. The U.S. economy contracted at an annualized rate of 4.8% in the first quarter, marking the beginning of what will likely be a severe recession.

Shares of Boeing (BA -0.33%) helped push the Dow higher, with the company's results and cost-cutting measures deemed good news by the market. Microsoft (MSFT -0.32%) stock was also up as the company prepares to report its own results this afternoon.

Boeing burns cash, plans to cut staff

Boeing delivered just 50 commercial airplanes in the first quarter, down two-thirds from the prior-year period. A combination of the 737 MAX grounding and the novel coronavirus pandemic wreaked havoc on the company's results.

An airplane.

Image source: Getty Images.

Total revenue was down 26% to $16.9 billion, while adjusted earnings per share lost $1.70. That revenue number was in line with analyst expectations, but EPS missed by $0.21. The cash flow picture was ugly: Boeing reported operating cash flow of negative $4.3 billion, and free cash flow of negative $4.7 billion.

Boeing said the pandemic is having a significant impact on demand for new commercial airplanes and services as airlines delay purchases, slow delivery schedules, and defer elective maintenance. In response, the company will reduce production rates across much of its portfolio. Production of the 787 and 777 will be decreased, and a low rate of production is planned for the 737 MAX this year. Boeing is leaving production of the 767 and 747 unchanged.

The production changes and the ongoing impact of the pandemic leave Boeing no choice but to reduce its workforce. The company is on track to lower its employee count by 10% through voluntary layoffs, natural turnover, and involuntary layoffs. The cuts will be deeper in the commercial airplane business.

While Boeing's results were a mess, the market cheered the company's cost-cutting maneuvers. Boeing stock was up about 4.6% in the morning. Shares remain down 65% from their 52-week high.

Microsoft reports after market close

Shares of Microsoft have rebounded strongly since bottoming out in March, with investors no doubt attracted to its fast-growing cloud business. The stock is down just 8% from its 52-week high, and a strong earnings report this afternoon could close the gap further.

Microsoft will report its fiscal third-quarter results after the market closes. The company warned in February that its "more personal computing" segment, which includes Windows, devices, and gaming, would take a hit from the pandemic. The situation may have deteriorated since then, given the spread of the virus in the U.S. and the social-distancing measures enacted across the country.

Analysts expect Microsoft to report revenue of $33.66 billion and earnings per share of $1.26. Those numbers compare to $30.6 billion and $1.14, respectively, in the prior-year period. While parts of Microsoft's business will be hurt by the pandemic, the cloud business will likely hold up well. The company disclosed at the end of March that cloud services usage had surged 775% over the previous week in regions with social-distancing and shelter-in-place orders. The cloud business includes the Azure cloud platform as well as cloud software offerings like Teams.

Shares of the tech giant were up about 2.6% in the morning as investors prepared for the company's report.