Plus, Atlanta Fed President Bostic urged Congress to pass additional fiscal support for the U.S. economy, Herman Miller shares surged after the company’s blowout earnings report, and Beyond Meat shares are down following a downgrade.
Stocks were mixed to start Friday with the Dow falling 31 points, or 0.1%. The S&P 500 was flat, while the Nasdaq rose 0.3% before falling lower.
Blocked. The U.S. moved to expel the Chinese-owned TikTok and WeChat apps from U.S. app stores as of Sunday, while reserving the right to reverse a ban on TikTok’s video-streaming service once it can hammer out a deal to satisfy national security concerns. “At the President’s direction, we have taken significant action to combat China’s malicious collection of American citizens’ personal data, while promoting our national values, democratic rules-based norms, and aggressive enforcement of U.S. laws and regulations,” said Commerce Secretary Wilbur Ross in a statement. Starting Sunday, U.S. companies will be banned from distributing WeChat and TikTok, meaning the two major mobile app stores run by Apple and Google will need to remove the apps from their stores. The move also blocks U.S. companies from providing services through WeChat “for the purpose of transferring funds or processing payments within the U.S.” TikTok now has until November 12 to resolve the U.S. national security concerns, after which U.S. companies will be blocked from providing internet hosting and services for the social media app. Ross added that for TikTok, “it’s just upgrades, maintenance things like that, that would be shut down at this stage. The real shutdown would come after November 12 in the event that there is not another transaction. So it’s very different how the way the two are being handled.”
Federal Reserve Bank of Atlanta President Raphael Bostic said this morning that Congress needs to provide additional fiscal support for the U.S. economy, which is quickly losing momentum as aid has lapsed and the coronavirus pandemic has raged on. “We definitely see signs of slowing,” Bostic said in an interview with Bloomberg. “What I would tell a policy maker is, there are lots of sectors where there is still a lot of pain and disruption that is going on. There are a lot of families who have a significant amount of uncertainty and those things will wear on our psyche and our ability to grow.”
As coronavirus cases surpass 30 million globally, experts say “pandemic fatigue” has set in in parts of Europe and elsewhere where coronavirus outbreaks are growing once again. France and Spain are seeing more new cases of the deadly virus than they did back when their outbreaks peaked this past spring, while Israel entered today a second nationwide lockdown as new cases soar there. “There are some worrying trends that we’re starting to see,” said Dr. Maria Van Kerkhove, head of the WHO’s emerging diseases zoonosis unit. “What is really worrying I think for us is that we’re not only seeing an increase in the case numbers but we’re seeing an increase in hospitalizations. We’re seeing increases in ICUs. …We haven’t even started to hit the flu season yet so we’re worried that these increasing numbers of hospitalization and ICU are really going to overburden an already burdened system.” Dominique Costagliola, an epidemiologist at the INSERM research institute in Paris, added that the response to the pandemic needs to be persistent. “When you look at the worldwide map of cases, you see that even if you control the virus in your country, the virus is still there, so it can come back,” Costagliola said. “Don’t think that because you are in a better situation at the moment, you can forget to pay attention to the virus.”
Herman Miller shares gained as much as 36% yesterday after the office furniture maker delivered a blowout earnings report. Herman Miller’s home office category has increased nearly 300% since last year as the coronavirus pandemic forces millions to work from home, driving a surge in customers upgrading their home offices. The company reported fiscal first quarter earnings per share of $1.24 on revenue of $626.8 million, compared to estimates for earnings of $0.26 per share on revenue of $524.8 million. “This has represented a real opportunity for us and one we’re excited about because the distribution of the workforce has been happening for a very long time prior to COVID,” Herman Miller CEO and President Andrea Owen said on the earnings call. “We are here to help people sort of revamp the spaces they do have that are office-oriented as well as support the workers that are working from home and now schooling from home. We think we’re even more set up for a distributed workforce of the future than we ever have been before.”
Beyond Meat shares are down more than 6% this morning after JPMorgan analyst Ken Goldman cut his rating on the alternative meat stock with a $122 price target. Goldman said in a note that he’s concerned with how far the stock has run up so far this year as its “outperformance is ‘above and beyond’ what we consider rational, even for a good company like Beyond,” and noted that rival Impossible Foods is taking market share at grocery stores, “though there is room for more than one alt-meat burger on retail shelves…the speed with which Impossible is catching up to Beyond is a bit surprising to us.” Longer term, however, Goldman said he’s still “optimistic that global demand for alt-meat will continue to rise over time; and Beyond’s management team, innovation strategy, and marketing efforts will pay off in the long run.”
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Rigel Pharmaceuticals (NASDAQ: RIGL): Rigel Pharmaceuticals shares gained as much as 16% yesterday after the company announced the start of its Phase 2 trial to evaluate the safety of fostamatinib, its oral spleen tyrosine kinase (SYK) inhibitor, for the treatment of hospitalized COVID-19 patients. The study is sponsored by the National Heart, Lung, and Blood Institute (NHLBI). ”With the ongoing pandemic continuing to cause tens of thousands of new daily cases of COVID-19 across the U.S., there is a critical need to not only stop the spread of the virus, but to also develop new and effective therapies to treat the infected population, including those with severe and life-threatening disease,” said Richard Childs, M.D., clinical director of the NHLBI. “As we work with the broader community to identify safe and effective therapeutic options for COVID-19 patients, we are hopeful that the investigation of fostamatinib will potentially aid in the fight against this pandemic.”