Plus, stocks are higher on hopes for trade talks between the U.S. and China, weekly jobless claims came in at 3.17 million, luxury department store Neiman Marcus filed for Chapter 11, and Tesla has temporarily halted production at its Shanghai plant.
Stocks were higher to start Thursday with the Dow rising 285 points, or 1.2%. The S&P 500 added 1.25%, while the Nasdaq gained 1.2%, clawing back its steep losses for the year.
Stocks were boosted this morning by a narrative right out of 2019: hopes for trade talks between the U.S. and China. Top Chinese and U.S. trade negotiators are expected to speak as soon as next week on progress in implementing the phase one trade deal after President Donald Trump threatened to “terminate” the agreement if China isn’t adhering to the terms. “We’re watching the deal very closely,” Trump said. “They understand. They have a deal and hopefully they are going to keep it. They may or they may not, we’ll see.” Chinese Vice Premier Liu He and U.S. trade representative Robert Lighthizer are expected to be on the trade call, which will be the first the two sides speak formally about the agreement since it was signed in January, just before the global coronavirus pandemic hit both economies.
Unemployment claims continued to swell. 3.17 million Americans filed for unemployment last week, brining the total for the last seven weeks amid the coronavirus shutdown to 33.5 million. According to Pantheon Macroeconomics chief economist Ian Shepherdson, the current pact indicates weekly claims should fall below 1 million by mid-June. “We’re very hopeful that June will see the beginnings of a rebound as states begin to reopen,” Shepherdson said. However, “initial claims are only coming down slowly, and more slowly than we had anticipated previously,” said Michael Gapen, chief U.S. economist at Barclays Plc, in a note. “The trend in claims points to upside risks to the unemployment rate and suggests federal resources in the CARES Act and other legislation have not been fully successful at keeping workers on payrolls.”
Moderna shares are up 7.5% at the time of writing following the company’s announcement that the FDA cleared its coronavirus vaccine for a phase 2 trial. Moderna said it will start the phase 2 trial with 600 participants and is in the process of finalizing plans for a phase 3 trail as early as this summer. “The imminent Phase 2 study start is a crucial step forward as we continue to advance the clinical development of mRNA-1273, our vaccine candidate against SARS-CoV-2,” Moderna CEO Stephane Bancel said in a statement. “With the goal of starting the mRNA-1273 pivotal Phase 3 study early this summer, Moderna is now preparing to potentially have its first [biologics license application] approved as soon as 2021.”
Neiman Marcus became the first department store to file for bankruptcy amid the coronavirus pandemic, and the second household-name retailer to file this week after J.Crew. The luxury department store chain was struggling even before the pandemic as it was overtaken by online rivals and saddled by $4 billion in debt, with those problems exacerbated by the virus outbreak that forced Neiman’s to close its 43 stores and furlough the majority of its 14,000 workers. Neiman Marcus said it has secured $675 million in financing from its creditors to fund operations through bankruptcy, which it expects to emerge from this fall. The chain “has struggled for years to adapt among ongoing secular changes facing the department store sector, a circumstance that has deteriorated because of the operation disruptions from the coronavirus and recessionary conditions,” said S&P analyst Mathew Christy in a recent note.
Tesla shares swooned a bit this morning after reports that the electric car maker has suspended production at its plant near Shanghai. Tesla informed factory workers who were supposed to return to work yesterday after China’s five day Labor Day break, with the holiday being extended to at least May 9. Chinese technology news site 36kr reported that the suspension of operations was due to component shortages, and problems with a crucial piece of manufacturing equipment that is being fixed. With the production halt at its China facility and its Fremont, California plant still closed amid the coronavirus pandemic, Tesla isn’t currently able to produce any vehicles globally.
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Axonics Modulation Technologies Inc (NASDAQ: AXNX): Axonics shares gained 10% yesterday after the medical device maker reported a surprise profit in the first quarter. “We are quite proud of this quarter’s exceptional revenue result considering we had only been in the market for two months prior to the start of 2020. Moreover, we believe that this result ranks among the highest revenue total generated in the history of the medical device industry for a company’s first full quarter of sales in the U.S. following FDA approval,” said Axonics CEO Raymond W. Cohen in the company’s earnings release. “The results are a testament to the quality of our 170 person U.S. commercial team and were driven by the overwhelmingly positive response from the SNM implanting community and their patients to the introduction of a bespoke SNM device that is intuitive, fuss-free, long-lived, MRI compatible, safe and clinically effective. This quarter’s results reinforce our confidence that the SNM market is poised for meaningful expansion in the years ahead, driven to a large extent by Axonics’ continuous innovation and commitment to increasing patient awareness. As elective procedures are rescheduled, we expect to be very active in the months ahead as more patients say ‘yes’ to Axonics and SNM therapy. Despite the setback from COVID-19, we remain bullish about our prospects for continued growth in 2020 and beyond.”