Plus, 30-year mortgage rates have fallen to their lowest level ever amid coronavirus fears, and an analyst says Gilead’s COVID-19 treatment only has a 50/50 chance, at best, of proving successful.
Stocks plunged to start Thursday with the Dow falling 713 points, or 2.7%. The S&P 500 traded 2.3% lower, while the Nasdaq declining 2.1%.
Fears about the coronavirus again gripped the market this morning following Wednesday’s wild swing higher as countries around the world extended quarantines and travel restrictions. “The majority of this is just growing concern about the fallout from the virus because it’s spreading,” said Sevens Report founder Tom Essaye. “For every hour, another group of people have it and it’s in another state. People are getting a bit nervous about this constant barrage of headlines.” Total confirmed cases of COVID-19 now top 95,700 worldwide, while the global death toll has risen to 3,280. Cases in the U.S. have risen to at least 159, while at least 11 deaths in the country have been attributed to the virus outbreak. A former director of the U.S. Agency for International Development said this morning that the U.S. has confirmed likely just a fraction of the total number of coronavirus cases in the nation. “We still don’t have anywhere near full visibility on total cases in the U.S. because of testing shortfalls,” said Jeremy Konyndyk. “What we’re seeing so far in terms of official case numbers in the U.S. is probably just the tip of the iceberg.”
The bipartisan National Governors Association sent a letter signed by 38 governors urging the Senate to pass the $8.3 billion emergency supplemental bill to help combat the spread of the coronavirus passed by the House yesterday.”Congress must assure states and territories that necessary resources will be provided to address the multitude of costs associated with a public health emergency,” the governors wrote. The Department of Health and Human Services said yesterday that the U.S. has about 1% of the required respirator masks that would be needed for medical professionals if the virus outbreak erupts into a pandemic here. New York Mayor Bill de Blasio confirmed two new cases of the virus in the city, a man and a woman with no connection to the other people diagnosed this week. The city is also checking at least five other people for the virus. And on the west coast, Amazon, Facebook, and Microsoft have all told Seattle and Bay Area employees to work from home as the coronavirus spreads in the region. California Governor Gavin Newsom declared a state of emergency Wednesday evening as cases of COVID-19 in the state rose to at least 53. And as companies continue to warn about earnings hits from the outbreak, the International Air Transportation Association said the financial impact of the coronavirus to the global air transportation industry could reach $113 billion.
30-year mortgage rates in the U.S. have tumbled to their lowest level on record as fears around the impact the coronavirus will have on the economy have sent investors rushing to the safety of Treasuries. Freddie Mac said in a statement this morning that the average rate has fallen to 3.29%, the lowest level in the 49 years of recorded data. Lenders have been staffing up to meet the demand of borrowers rushing to refinance into cheaper loans. According to Capital Economics Ltd. U.S. property economist Matthew Pointon, mortgage rates are likely to continue to fall before hitting a floor. “I don’t think it’s going to go below 3%,” Pointon said. “Banks already have a surge in demand – they don’t want to attract new customers.”
Campbell Soup shares have risen 13% this week and its fiscal Q2 earnings report won over at least one longtime bear late yesterday. Campbell Soup reported adjusted earnings per share of $0.72, beating estimates of $0.66 per share. The company also raised its outlook for the year for earnings per share by five cents to between $2.55 and $2.60. Credit Suisse analyst Robert Moskow upgraded the stock to Neutral after having an Underperform rating on the stock since April 2018. “We underestimated the positive impact that CEO Mark Moskow had made at the company by increasing investment spending on soup, restoring relationships with retailers, sharpening the focus of the organization, and improving the operational effectiveness of Snyder’s-Lance,” Moskow wrote in a note, adding that the company’s outlook will prove conservative as it doesn’t take into account pantry-loading as consumers stock up on non-perishable foods on fear of the spread of the coronavirus. “Pantry-loading is not normally a long-term benefit for the company, but we think increased trial of Campbell’s soup at this stage in the company’s turnaround will prove more beneficial than normal,” Moskow wrote.
And one of Gilead Sciences Inc’s biggest bulls said in a note that the drugmaker’s experimental therapy remdesivir for the coronavirus has just a 50/50 shot at success at best. RBC analyst Brian Abrahams said in the note that developing a treatment for the deadly virus “remains a somewhat risk, unclear opportunity.” Wells Fargo analyst Jim Birchenough said, however, that if remdesivir meets the main study goals for the treatment of the coronavirus of reducing fevers and driving a higher hospital discharge rate, it could add as much as $20 to Gilead’s stock price. RBC has a price target of $86 on Gilead shares, while Wells Fargo has a price target of $87 on the shares.
Stocks We’re Watching
The Meet Group (NASDAQ: MEET): Shares of this online dating apps giant surged as much as 26% yesterday after it announced that it had entered into a definitive agreement to be acquired by Germany’s ProSiebenSat.1 at a valuation of more than $500 million. “We are excited about this transaction and the significant benefits resulting from a combination with Parship Group,” said Geoff Cook, Chief Executive Officer of The Meet Group. “This transaction will allow us to tap new strategic growth opportunities by leveraging our video platform and ProSiebenSat.1’s experience with content and entertainment. What’s more, with this transaction and the participation of both General Atlantic and ProSiebenSat.1, we will achieve a new level of financial scale and backing, which has the potential to further accelerate our growth.”