Plus, oil fell back into negative territory this morning, Trump pledged aid for struggling oil and gas companies, Coca-Cola said its global volumes have plunged 25% so far this month, and Starbucks is adding Beyond Meat products to its menu in China.
Stocks fell sharply for a second day Tuesday with the Dow dropping 510 points, or 2%. The S&P 500 traded 2.6% lower, while the Nasdaq sank 3.4%.
Following yesterday’s drop into uncharted waters, oil reversed gains this morning to again trade in negative territory with West Texas Intermediate crude futures for May delivery trading as low as -$16.74 per barrel. The world’s largest independent oil storage company said this morning that it has all but run out of space for crude and refined products as a result of the rapidly expanding oil glut. “The available capacity on the oil side is almost completely sold out for our terminals,” said Gerard Paulides, CFO of Rotterdam-based Royal Volpak NV. “For Volpak, worldwide available capacity that is not in maintenance is almost all gone and from what I hear elsewhere in the world we’re not the only ones.”
As oil prices plunge to historic lows, President Donald Trump pledged to make funds available for the oil industry to prevent the loss of jobs, and said that he has directed Treasury Secretary Steven Mnuchin and Energy Secretary Dan Brouillette to “formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future,” Trump tweeted this morning. In other stimulus news, Senate Minority Leader Chuck Schumer said this morning that he believes the Senate will pass an additional round of funding for small businesses later today. Schumer told CNN that he, House Speaker Nancy Pelosi, White House chief of staff Mark Meadows, and Treasury Secretary Mnuchin had spoken “well past midnight” last night and that they “came to an agreement on just about every issue.” “Staff were up all night, writing. There’s still a few more I’s to dot and T’s to cross, but we have a deal. And I believe we’ll pass it today,” Schumer said. “We insisted that a chunk of the money be separate from the competition with the bigger companies, you know the ones that have two, three, 400 people and a relationship with the banks, and we got $125 billion that will go exclusively to the unbanked. To the minorities, to the rural areas and to all of those little mom and pop stores that don’t have a good banking connection and need the help.”
As cases of the coronavirus rise to nearly 790,000 in the U.S., it’s becoming clearer how much of an impact the pandemic has had on the auto industry and housing market. IHS Markit lowered its global auto sales forecast today, saying that it expects vehicle sales in the U.S. to fall 26.6% this year to 12.5 million units, the lowest level since 2010. “The unexpected and sudden nature of the impacts of the pandemic are hitting the autos sector hard, with unprecedented levels of uncertainty around prospects for meaningful global recovery,” said Colin Couchman, executive director for global autos demand forecasting at IHS Markit. “Market fortunes are expected to be mixed, as delayed and destroyed demand interacts with massive global supply disruption.” In the housing market, sales of existing homes fell by a wider-than-expected 8.5% in March, according to the National Association of Realtors’ seasonally adjusted index. “We saw the stock market correction in late February,” said Lawrence Yun, chief economist at the NAR. “The first half of March held on reasonably well, but it was the second half of March where we saw a measurable decline in sales activity.” Yun added that sales could fall as much as 30% to 40% over the coming months. “Already, sellers are getting less aggressive with asking price growth, and we’re seeing roughly half as many new listings come up for sale this year versus last year.”
Coca-Cola shares are down more than -2% this morning after the beverage company said its global volumes have plunged 25% this month. “The ultimate impact on the second quarter and full year 2020 is unknown at this time, as it will depend heavily on the duration of social distancing and shelter-in-place mandates, as well as the substance and pace of macroeconomic recovery,” the company said. “However, the impact to the second quarter will be material.” While volumes fell 1% in the first three months of the year, Coca-Cola said it saw substantial declines in March in away-from-home channels, which includes restaurants, bars, and movie theaters, and accounts for approximately 50% of the company’s revenues. “We’ve been through challenging times before as a company,” said CEO James Quincey, “and we believe we’re well positioned to manage through and emerge stronger.”
And Starbucks is adding Beyond Meat products to its menu in China, according to a report from CNBC, sending shares of the alternative meat company up nearly 6% this morning. The global coffee chain has developed three dishes using Beyond’s beef alternative, as well as two made with a pork alternative from Hong Kong-based Omniport as part of Starbucks’ goal to become “resource positive.” The partnership marks Beyond’s first entry into the Chinese market, and the company has said it has plans to expand its manufacturing to Asia by the end of this year, despite the global coronavirus pandemic, as part of its strategy to sell its meatless meats to Chinese consumers.
Stocks We’re Watching
Vaxart Inc (NASDAQ: VXRT): Vaxart shares are up more than 29% at the time of writing after the company announced this morning that it has obtained positive pre-clinical results for its COVID-19 vaccine candidates, with several of the vaccine candidates generating immune responses in all tested animals after just one dose. “These early pre-clinical results are in line with those for our oral influenza vaccine which was protective in a clinical Phase 2 efficacy study,” said Vaxart chief scientific officer Sean Tucker, PhD. “Additional data will inform us on which candidate we will move forward into clinical trials. We are particularly interested in vaccine candidates that can generate mucosal immune responses in addition to serum antibody responses. That is a key feature of our oral vaccines and potentially significant for protection against SARS CoV-2, the virus that causes COVID-19.”