The S&P 500 turned slightly positive Monday as big tech and energy shares rose. The advances helped offset earlier declines spurred as mounting concerns that companies would see lasting damage in the aftermath of the coronavirus pandemic spooked market participants.
Meanwhile, the Trump administration doubled down on its attack on China over the outbreak, with Secretary of State Mike Pompeo saying Sunday that the U.S. found “enormous evidence” that the virus came from a lab in Wuhan, China, without elaborating further on details.
Shares of airline stocks slid further Monday morning, after famed investor Warren Buffett said during Berkshire Hathaway’s annual shareholder meeting Saturday that his company exited its stakes in four of the largest U.S. air carriers American (AAL), United (UAL), Delta (DAL) and Southwest (LUV) due to the coronavirus. Buffett noted “the world changed for airlines” as the pandemic overtook the world and halted nearly all global travel. Berkshire’s stake was worth at least $4 billion in these airlines late last year.
Meanwhile, updates on the status of the outbreak across the country continued to trickle in. New York state, the domestic epicenter of the virus, extended a decline in new virus-related deaths following an early-April peak. Monday’s latest reported daily death toll totaled 226, versus the 280 reported a day earlier. New cases in the state were 2,538, the lowest since mid-March.
New York Governor Andrew Cuomo has spoken of reopening parts of the state less hard hit by the virus after May 15, and other parts of the country have already begun opening certain businesses and public spaces, with some restrictions. However, many remained concerned that stay-in-place orders should be kept in place longer to prevent a resurgence in cases.
“The reopening of economies has prompted concerns about a second wave of infections and potential double dip in the economy. We readily admit that many unknowns concerning the virus remain, but we do expect additional waves of infections to occur,” Morgan Stanley chief economist Chetan Ahya wrote in a note Sunday.
“However, we take comfort that the phased reopening, the scaling up of public health authorities’ ability to test and trace on a meaningful level, the development of medical solutions to treat and prevent the disease and the awareness of the population at large mean we have a much better chance to reduce the size and scope of future outbreaks,” Ahya added.
In a more positive update on the virus front, Gilead Sciences is preparing to get its antiviral drug remdesivir out to patients starting this week, Gilead CEO Daniel O’Day told CBS in a Sunday interview. The U.S. Food and Drug Administration granted remdesivir emergency use authorization to treat the coronavirus as of Friday.
A steady drumbeat of corporate earnings results will also continue this week, providing more indications of how the pandemic has impacted companies and forced them to rethink their outlooks for the current and coming quarters.
So far, though, investors have mostly forgiven dismal first-quarter results, with coronavirus-related damage now well understood and expected.
Companies comprising about 77% of the S&P 500’s market capitalization have reported results to date. One-fifth have missed consensus estimates by at least one standard deviation – the highest rate since the fourth quarter of 2008, according to a Goldman Sachs analysis. Still, firms missing expectations have been punished with an average of just 0.89% of share price underperformance the day after reporting, or the least since the beginning of 2010.
“This trading pattern confirms our expectation that investors would largely look through 1Q results,” the analysts wrote in the note.
Later in the week, market participants will receive another batch of corporate earnings results from companies including Disney (DIS), Beyond Meat (BYND), General Motors (GM), CVS (CVS), Lyft (LYFT) and Uber (UBER). Economic data reports slated for release include the April jobs report, which is expected to show deeper labor market misery as social distancing measures broadened out and put more individuals out of work.
4:03 p.m. ET: S&P 500 erases earlier losses as big tech and energy shares climb
Here were the main moves in markets as of 4:03 p.m. ET:
S&P 500 (^GSPC): +12.03 (+0.42%) to 2,842.74
Dow (^DJI): +26.07 (+0.11%) to 23,749.76
Nasdaq (^IXIC): +105.77 (+1.23%) to 8,710.71
Crude (CL=F): +$1.20 (+6.07%) to $20.98 a barrel
Gold (GC=F): +$11.00 (+0.65%) to $1,711.90 per ounce
10-year Treasury (^TNX): -0.5 bps to yield 0.6370%
2:35 p.m. ET: Domestic crude oil prices settles higher
June futures for U.S. West Texas intermediate crude oil settled higher by more than 2% to $20.39 per barrel at the end of trading Monday. This was the commodity’s fourth consecutive session of advances, and the first time WTI futures contracts settled above $20 per barrel since April 14.
11:45 a.m. ET: Nasdaq turns slightly positive as big tech shares rise
The S&P 500 and Dow held lower, while the Nasdaq climbed into slightly positive territory as shares of Amazon, Netflix, Facebook, Microsoft and Apple advanced during intraday trading. The Information Tech sector outperformed in the S&P 500.
Here were the main moves in markets, as of 11:46 a.m. ET:
S&P 500 (^GSPC): -7.27 points (-0.26%) to 2,823.44
Dow (^DJI): -183.67 points (-0.77%) to 23,540.02
Nasdaq (^IXIC): +56.47 points (+0.66%) to 8,661.26
Crude (CL=F): -$0.07 (-0.35%) to $19.71 a barrel
Gold (GC=F): +$10.60 (+0.62%) to $1,711.50 per ounce
10-year Treasury (^TNX): -0.5 bps to yield 0.635%
9:45 a.m. ET: Tyson Foods stock falls after warning of extended plant closures
Tyson Foods (TSN) on Monday reported first-quarter sales that grew over last year but profit that declined, as shifting customer purchasing patterns and factory disruptions amid the coronavirus pandemic cut into margins.
“During the quarter, we witnessed an unprecedented shift in demand from foodservice to retail, temporary plant closures, reduced team member attendance, and supply chain volatility as a result of the virus. Despite these challenges, we were able to adjust our product mix and redirect products to the appropriate channels,” Tyson Foods’ CEO Noel White said in a statement.
However, the company added: "Operationally, we have and expect to continue to face slowdowns and temporary idling of production facilities from team member shortages or choices we make to ensure operational safety. The lower levels of productivity and higher costs of production we have experienced will likely continue in the short term until the effects of COVID-19 diminish.”
Volume increases in retail have “not been sufficient to offset the losses in foodservice and as a result, we expect decreases in volumes in the second half of fiscal 2020,” the company said in the earnings statement.
Fiscal second-quarter sales of $10.89 billion grew 4.3% over last year. However, adjusted earnings per share of 77 cents fell relative to the $1.20 reported in the same quarter last year.
10:00 a.m. ET: Factory orders slump 10.3% in March
U.S. orders for manufactured goods slid 10.3% in March, deepening declines after a just 0.1% decline in February, the Commerce Department said Monday. Consensus economists had expected factory orders to fall 9.7% in March, according to Bloomberg data.
Excluding transportation orders, factory orders still declined 3.7% in March, following a 1.1% drop in February.
Durable goods orders were also downwardly revised in the Commerce Department’s final March revision, to 14.7% versus the 14.4% previously reported. This was the steepest decline since August 2014.
9:42 a.m. ET: Carnival Cruise Line plans to resume some services starting August 1
Carnival Cruise Line (CCL) announced Monday it will resume its North American services with a phased re-launch beginning August 1, starting with eight ships from Miami, Port Canaveral and Galveston, according to a statement. All other North American and Australian cruises will continue to be canceled through August 31.
The company said impacted guests will receive emails with options for future cruise credit and onboard credit packages, or a full refund.
The cruise industry has been one of the business areas hardest hit by the pandemic, especially following several high-profile incidences of outbreak spreading aboard Carnival cruise ships. Shares of Carnival were down 73% for the year to date through Friday’s close.
9:33 a.m. ET: Stocks open lower
Here were the main moves in markets, as of 9:33 a.m. ET:
S&P 500 (^GSPC): -25.9 points (-0.91%) to 2,804.81
Dow (^DJI): -276.68 points (-1.17%) to 23,447.01
Nasdaq (^IXIC): -64.48 points (-0.75%) to 8,542.29
Crude (CL=F): -$0.49 (-2.48%) to $19.29 a barrel
Gold (GC=F): +$12.00 (+0.71%) to $1,712.90 per ounce
10-year Treasury (^TNX): -0.8 bps to yield 0.632%
7:11 a.m. ET Monday: Stock futures fall
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 7:11 a.m. ET:
S&P 500 futures (ES=F): down 26 points, or 0.92%, to 2,795.75
Dow futures (YM=F): down 277 points, or 1.17%, to 23,342.00
Nasdaq futures (NQ=F): down 73.50 points, or 0.84%, to 8,644.50
Crude (CL=F): -$1.28 (-6.47%) to $18.50 a barrel
Gold (GC=F): +$13.50 (+0.79%) to $1,714.40 per ounce
10-year Treasury (^TNX): -3.9 bps to yield 0.601%
6:13 p.m. ET Sunday: Stock futures open lower
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:13 p.m. ET:
S&P 500 futures (ES=F): down 27 points, or 0.96%, to 2,794.75
Dow futures (YM=F): down 236 points, or 1.00%, to 23,383.00
Nasdaq futures (NQ=F): down 83 points, or 0.95%, to 8,635.00