Plus, 1-month and 3-month Treasury yields slipped into negative territory this morning, Target withdrew its full-year forecast, and Nike shares are rising after the sneaker maker reported better-than-expected sales.
Stocks fell slightly to start Wednesday with the Dow trading flat, the S&P 500 dropping by 0.8%, and the Nasdaq trading 1.3% lower.
White House and Senate leaders agreed to a massive $2 trillion coronavirus stimulus packaged last night. “At last we have a deal,” Senate Majority Leader Mitch McConnell said around 1:30am ET. “In effect, this is a war-time level of investment into our nation.” Senate Democratic leader Chuck Schumer said, “After five days of arduous negotiations, after sleep-deprived nights and marathon negotiating sessions, we have a bipartisan agreement on the largest rescue package in American history.” The bill includes direct payments to lower- and middle-income Americans of $1,200 for each adult and $500 per child, expanded unemployment benefits, $350 billion in aid to small businesses, $500 billion in loans and other assistance for corporations, and $150 billion for hospitals and other healthcare providers for equipment and supplies. McConnell said the bill will be voted on by the Senate later today, and the bill will then be sent to the House for a vote before final signature from President Trump. House Speaker Nancy Pelosi said in a statement this morning that the “bipartisan legislation takes us a long way down the road in meeting the needs of the American people.”
In a first for U.S. financial markets, 1-month and 3-month Treasury yields fell below zero this morning. As of this writing, the 1-month Treasury yield has fallen to -0.013%, while the 3-month Treasury yield has fallen to -0.035%. “This is part and parcel of the whole flight to quality thing,” said Kim Rupert, managing director of global fixed income at Action Economics. “They’re obviously the most liquid instrument. We saw a lot of selling pressure a few days ago when everyone was selling everything to get cash. But with all the plans the Fed has introduced, the bill market is much safer.”
There are now at least 55,225 cases of COVID-19 in the U.S., with the death toll rising to at least 802 overnight. Former FDA Commissioner Scott Gottlieb said today that hospitals in New York City are nearing maximum capacity due to an influx of coronavirus patients in the hardest hit area of the country. “New York City hospitals right now are on the brink of what I would call being maxed out in terms of their available capacity,” Gottlieb told CNBC this morning. “New York has another about five weeks to go for this between now and when they’re going to reach peak hospitalizations, so the fact that they’re stretched right now is worrisome… Once that happens then the mortality rate is going to start to increase. It’s going to accelerate.” New York Governor Andrew Cuomo said that the state will need a minimum of 30,000 additional ventilators, and up to 140,000 hospital beds in 14 to 21 days, while the state currency only has about 53,000 hospital beds. Global cases of the deadly virus now top more than 435,000, with at least 19,625 dead. India imposed a three-week long nationwide lockdown for its 1.3 billion people in an effort to reduce the spread of the virus there, while the U.K. government shut down Parliament for four weeks after several politicians, a health minister, and even heir to the throne, Prince Charles, fall ill there. In Portugal, the number of confirmed coronavirus cases surged 27% today to 2,995, while Spain reported its deadliest day yet with 738 fatalities as its confirmed cases rose to 47,610 from 39,673 on Tuesday.
Target said today that it will delay plans to remodel hundreds of stores, open new stores, and offer fresh groceries and beer for curbside pickup, as well as withdrawing its financial guidance for the first quarter and fiscal year due to the unpredictable business climate caused by the coronavirus pandemic. CEO Brian Cornell said Target will focus instead on providing food, medicine and other essential items during the outbreak. “None of us know how long this virus is going to last,” Cornell said this morning. “It’s safe to say that sitting here today, America is largely out of business, as many industries have idled capacity, as consumers are staying at home, working from home. Schools are closed. It’s a very unique environment that non of us have seen before, and there is no playbook for how to react in this environment. We’re writing the script each and every day.”
And Nike shares are up more than 11% this morning after the athletic apparel and sneaker maker posted better-than-expected third quarter sales thanks to a boost from its digital business and growth in North America. Nike’s China revenue only declined by 4% year-over-year in the quarter, which Cowen analyst John Kernan wrote in a note is “quite frankly incredible and speaks to the brand’s ability to manage through macro dislocation.” CEO John Donahoe said in a news release, “In an extraordinarily dynamic time, Nike’s strong results are testament to our deep consumer connections, compelling product innovation and agile teams around the world. We know it’s in times like these that strong brands get even stronger. As we start to see recovery in China, no one is better equipped than Nike to navigate the current climate.”
Stocks We’re Watching
Novavax Inc (NASDAQ: NVAX): Novavax shares jumped as much as 38.8% yesterday after the biotech said its NanoFlu treatment for seasonal flu achieved all primary endpoints in a phase 3 trail for adults aged 65 and older. “These strong Phase 3 results align with and validate our previous clinical trials, in which NanoFlu showed higher HAI antibody responses than the leading flu vaccine for older adults,” said Nanovax CEO Stanley Erck. “We expect that both Fast Track designation and the accelerated approval pathway from the FDA will help Novavax bring NanoFlu to market as quickly as possible to address the serious public health threat of influenza.”