Plus, White House and Democratic negotiators made progress toward a deal on a new relief bill, ADP reported a sharp decrease in job creation in July, and Square’s earnings release was leaked ahead of schedule.
Stocks were higher to start Wednesday with the Dow adding 243 points, or 0.9%. The S&P 500 gained 0.5%, while the Nasdaq traded 0.1% higher.
Negotiations between the White House and Democratic leaders marched forward on Tuesday, with a new coronavirus relief package possible by the end of the week. As the two sides continue to grind through differences to strike an agreement, Senate Majority Leader Mitch McConnell said he is likely to back whatever deal they make. House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer met with Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows yesterday, and Schumer said after the meeting, “We’re making progress. We really went down issue by issue by issue, slogging through them. They made some concessions, which we appreciated. We made some concessions, which they appreciated. We’re still far away on a lot of the important issues, but we’re continuing to go at it.” The two sides have agreed on the need to send another round of $1,200 to Americans, but they have yet to come to agreement on how to extend extra federal unemployment benefits.
Job gains slowed sharply in July, suggesting rising coronavirus cases put the brakes on the job market and the economic recovery. According to a report from ADP and Moody’s Analytics, private payrolls increased by just 167,000 last month, a significant tumble from June’s upwardly revised gain of 4.314 million. “The labor market recovery slowed in the month of July,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “We have seen the slowdown impact businesses across all sizes and sectors.” The Labor Department will report its jobs figure for July on Friday, which is forecast to show private payrolls increased by 1.5 million.
As confirmed coronavirus cases rise to more than 4.77 million in the U.S., Johnson & Johnson said this morning that it has reached an agreement with the U.S. government to develop and deliver 100 million doses of its coronavirus vaccine candidate in a deal totaling more than $1 billion. “We are scaling up production in the U.S. and worldwide to deliver a SARS-CoV-2 vaccine for emergency use,” said Dr. Paul Stoffels, chief science officer at Johnson & Johnson, in a statement. In other vaccine news, Novavax shares are up nearly 13% this morning after a wild ride yesterday following the release of positive data on the first human trial of its experimental COVID-19 vaccine. Cantor Fitzgerald analyst Charles Duncan said Novavax’s vaccine appears to be “more-than-viable, dare we say ‘class-leading,’” while JPMorgan analyst Eric Joseph said the results show its “not to far a stretch to conclude” that the neutralizing antibody activity of the vaccine “looks best-in-class.”
In earnings news, Moderna reported a fivefold increase in second quarter revenue to $66.4 million. “The second quarter marked a new growth phase for Moderna as we started to build our commercial team, a historic moment for those of us who have worked at the company for many years since it was a breakthrough research enterprise,” Moderna CEO Stephane Bancel said in a statement. “As we pivot to a commercial-stage company, we recognize the need for responsible pricing in the face of the pandemic.” CVS also reported a strong second quarter, posting adjusted earnings per share of $2.64 on revenue of $65.3 billion, compared to estimates for earnings per share of $1.93 on revenue of $64.23 billion. “The environment surrounding COVID-19 is accelerating our transformation, giving us new opportunities to demonstrate the power of our integrated offerings and the ability to deliver care to consumers in the community, in the home and in the palm of their hand which has never been more important,” CVS Chief Executive Larry Merlo said in a news release. And Wayfair reported a year-over-year gain in revenue of 83.7% to $4.3 billion, with the company delivering 18.9 million orders in the quarter. “We are all currently living and operating in uncertain times, which are dominated by the global pandemic as well as pressing social issues,” CEO Niraj Shah said in a statement. “The second quarter was a very strong period for Wayfair. Our strategic long term investments positioned us well to serve our customers and to quickly adapt during a challenging time. We experienced unprecedented demand in Q2 and saw record numbers of new and repeat customers choose Wayfair.”
And Square shares are up more than 11% after its earnings results were leaked a day ahead of schedule. The leaked results showed the payment processor topped consensus estimates for earnings and revenue rose by 64% to $1.92 billion. Transaction revenues of $683 million topped estimates for $533 million, while subscription and services revenue came in at $346 million. Square also posted $19 million in hardware revenue and saw a 600% surge in bitcoin revenue driven by new active bitcoin customers and increased demand for the cryptocurrency. And gross profit for its peer-to-peer Cash App rose 167% year-over-year to $281 million. “Notwithstanding management’s acknowledgement that Cash App’s performance may have benefited from stimulus and unemployment benefits, results for the consumer oriented platform demonstrated impressive strength during the quarter,” said JMP Securities analyst David Scharf, who carries a market-perform rating on the stock. Square is set to officially report its results after the bell today.
Stocks We’re Watching
Alterity Therapeutics Ltd (NASDAQ: ATHE): Alterity shares jumped as much as 281% yesterday after the biotech announced new animal data for its lead drug candidate ATH434 for the treatment of Multiple System Atrophy (MSA) which showed the drug reduces α-synuclein pathology, preserves neurons, and improves motor performance. Alterity’s Chief Medical Officer, Dr David Stamler, said: “Drug-induced QT prolongation can pose a significant risk for patients, so a clean bill of health on this safety measure is important as we advance to Phase 2. In searching for new treatments to modify disease progression, we need to develop agents that are as safe as possible.”