Plus, negative bank earnings kept rolling in, coronavirus cases surpassed 2 million globally, Abbott Laboratories released a new COVID-19 antibodies test, and Apple released a new, budget-friendly iPhone.
Stocks fell sharply to start Wednesday with the Dow dropping 700 points, or roughly 3%. The S&P 500 and Nasdaq traded 2.9% and 2.1% lower, respectively.
The wave of bank earnings marched on this morning with Goldman Sachs, Bank of America, and Citigroup reporting Q1 results. Goldman Sachs said its first quarter profit fell 46% amid the coronavirus pandemic, even as the firm’s trading division pushed company revenue to $8.74 billion, beating expectations. “Our quarterly profitability was inevitably affected by the economic dislocation,” said CEO David Solomon in a statement. “As public policy measures to stem the pandemic take root, I am firmly convinced that our firm will emerge well-positioned to help our clients and communities recover.” Bank of America, meanwhile, reported its Q1 profit sank 45% as the company set aside $3.6 billion for loan-loss reserves, the most since 2010. “We’re now being tested in a new environment,” said CEO Brian Moynihan on a conference call with analysts. “We didn’t know what economic challenges might cause us to have to demonstrate this resilience. That challenge is upon us now.” And Citigroup saw revenue gains 12% year-over-year due to higher fixed income and equity trading, but that was no match for the 46% drop in net income and the $7.03 billion set aside to cover potential losses on loans. “COVID-19 is a public health crisis with severe economic ramifications,” said Citi CEO Michael Corbat in a statement, adding that while revenue held up, “economic shocks caused by the pandemic weren’t felt until late in the quarter.”
Speaking of “economic ramifications,” there were a slew of negative economic data out this morning. U.S. retail sales tumbled the most on record in March, falling 8.7% from the month prior, with clothing stores seeing the greatest decline at 50.5%. U.S. factory output dropped in March by the most since 1946 as the wave of shutdowns due to the coronavirus crippled the manufacturing sector. Production fell 6.3% in March following a decline of just 0.1% in February, with manufacturing in New York falling by the biggest margin ever to -78.2. And the homebuilder confidence index plunged 42 points to a reading of 30 for April, the biggest monthly drop in the index’s 35-year history. “The economy is clearly in ruins here,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “This was just one month… Consumers are hunkering down at home, only venturing out to go to the grocery store. It’s lights out today, and as far as we can tell, it’s going to be worse next month.”
Coronavirus infections reached 2 million globally, while U.S. cases rose to more than 610,000. President Donald Trump said yesterday that the U.S. would temporarily halt funding for the World Health Organization because the WHO took China’s claims about the coronavirus “at face value” and failed to share information about the pandemic as it spread. China in response said it had “serious concerns” about Trump’s decision and called on the U.S. to fulfill its responsibilities. “This U.S. decision will weaken the WHO’s capabilities and undermine international cooperation,” said Chinese foreign minister spokesperson Zhao Lijian. The U.S.’s move also attracted criticism from health policy experts as well as Bill Gates, who said in a tweet, “Halting funding for the World Health Organization during a world health crisis is as dangerous as it sounds. Their work is slowing the spread of COVID-19 and if that work is stopped, no other organization can replace them. The world needs [the] WHO now more than ever.”
Abbott Laboratories announced this morning the launch of its third test for the coronavirus and said that it could screen up to 20 million people for COVID-19 antibodies by June. The company plans to distribute 4 million of the new antibody tests by the end of April, after an initial shipment of 1 million tests this week. “Antibody testing is an important next step to tell if someone has been previously infected,” Abbott said in a press release. “It will provide more understanding of the virus, including how long antibodies stay in the body and if they provide immunity.” Infectious disease experts say that such antibody screenings, also called serological tests, are needed to track the spread of the coronavirus and to develop containment strategies. “We continue to contribute in a significant and meaningful way by providing new solutions across our diagnostics testing platforms,” said Abbott CEO Robert Ford in a statement.
And Apple announced a new, cheaper iPhone model today, its first low-cost smartphone in four years. The new iPhone SE costs $399 and preorders will begin on Friday, April 17, with deliveries on April 24. “The first iPhone SE was a hit with many customers who loved its unique combination of small size, high-end performance and affordable price; the new second-generation iPhone SE builds on that great idea and improves on it in every way — including our best-ever single-camera system for great photos and videos — while still being very affordable,” said Phil Schiller, Apple’s senior vice president of Worldwide Marketing, in a statement. “iPhone SE features the industry-leading performance of A13 Bionic that enables great battery life, takes stunning Portrait mode and Smart HDR photos, shoots amazing videos with stereo audio, is great for games and super fast web surfing, and is built with the same industry-leading security features our customers expect. We can’t wait to get iPhone SE into customers’ hands.” The new budget-friendly model should tide users over until Apple introduces a revamped 5G-capable iPhones later this year, and shows that Apple’s supply chain in China has returned to some level of normalcy amid the global coronavirus pandemic. Apple also said that its new iPad Pro Magic Keyboard will go on sale today, and will be shipped next week.
Stocks We’re Watching
Iovance Biotherapeutics Inc (NASDAQ: IOVA): Iovance shares jumped as much as 19.6% yesterday after the late-stage biotech announced that Phase I data on the use of its tumor infiltrating lymphocytes (TIL) in patients with non-small cell lung cancer will be presented by H. Lee Moffitt Cancer Center, which conducted the trial, at the American Association for Cancer Research Virtual Annual Meeting at the end of April. “We are very pleased that Moffitt will present clinical data demonstrating the potential for tumor infiltrating lymphocytes, or TIL, in such an unmet medical need indication, non-small cell lung cancer,” said Maria Fardis, Ph.D., MBA, the president and CEO of Iovance, in a statement. “This data is the basis of our strategy to investigate Iovance TIL in two cohorts of non-small cell lung cancer patients in our IOV-COM-202 ‘basket’ study. We continue to be excited about the broader potential of Iovance TIL in additional tumor types.”