Plus, oil rebounded, the Senate passed the $484 billion supplemental coronavirus relief package, Delta reported its first quarterly loss in five years, and Chipotle said its digital sales more than doubled in Q1.
Stocks were higher to start Wednesday with the Dow rising 450 points, or 1.9%. The S&P 500 gained 2.1%, while the Nasdaq traded 2.2% higher.
Oil rebounded with West Texas Intermediate crude up nearly 30% to $15.15 per barrel at the time of writing. The price collapse in oil over the last few weeks risks pushing the U.S. shale industry into complete shutdown, and operators are already switching off wells, retiring one in three drill rigs, abandoning fracking, laying off as many as 51,000 workers and reducing salaries, and some have even gone bankrupt in just weeks. While prices have recovered today after this week’s unprecedented plunge into negative territory, even at $15, “everything back in the field, except the newest and most productive wells, is losing money on a cash-cost basis,” said IHS Markit analyst Raoul LeBlanc. “At this price you’ll start shutting in large amounts of production.”
The Senate passed the $484 billion package of new coronavirus pandemic relief funds Tuesday, paving the way for the House to pass the bill tomorrow. The bill is being considered as an interim step as the coronavirus continues to wreak economic havoc, and the House is already beginning work on a new relief package. “We’re ready to go on to the next bill,” said House Speaker Nancy Pelosi. President Donald Trump said aid to state and local governments would be a part of the next round of stimulus, as would funds for road projects and expanding broadband service. “Infrastructure is going to be a big part,” Trump said at a press briefing. “We have to rebuild our country.” “More is still needed. Almost definitely, this is not going to be a 1, 2, 3 bill thing, just as this pandemic isn’t going to be a couple of months thing,” said Natixis economist Troy Ludetka, adding that lawmakers and the Trump administration need to “just keep throwing money at the problem.”
Cases of the coronavirus in the U.S. have risen to more than 826,000. The earliest known deaths from COVID-19 in the U.S. came weeks earlier than previously thought, suggesting the virus may have been spreading for weeks outside of health officials’ attempts to contain it. Two residents of Santa Clara County, California, who died at home on February 6 and February 17 were infected with the virus, according to the county’s public health department. The timing of the deaths was roughly three weeks before health officials identified the first suspected cases of community transmission and also before cities and states began implementing widespread social-distancing measures. Elsewhere, New York City Mayor Bill de Blasio said the city will need to run “hundreds of thousands” of coronavirus tests a day before officials there can begin easing social distancing guidelines. “To get to low-level transmission and to hold onto it, you need a huge amount of testing,” de Blasio said at a press conference. “Not just tens of thousands of tests per day but as many as hundreds of thousands [of] tests per day for a city of 8.6 million people.”
LabCorp shares are up around 4% this morning after the company said it is widening the availability of its blood test designed to detect whether someone has been exposed to the coronavirus. CEO Adam Schechter said the tests are “for patients that don’ have symptoms, that do not currently have COVID-19 but believe they’ve had it in the past. Schechter said that LabCorp will begin processing the tests on Monday and that people will be able to access the blood tests through their physicians and urgent care clinics as well as through telemedicine services. “They’ll be able to put the orders in through our service centers that we have across the United States, and then people will be able to go to our service centers to have their blood taken,” Schechter said. “We send it to our labs and we get them the results in one to two days.” While Schechter added that LabCorp’s test is “extremely accurate,” he also stressed that it’s too early to determine the benefit of having antibodies. “We do know that if somebody’s had the virus, and they show that they have the antibodies, that our test can certainly detect those antibodies,” he said. “What we don’t know is a year from now whether those antibodies will still be as meaningful as they are today.”
And in earnings news, Delta posted its first quarterly loss in more than five years and warned of a bleak forecast for the spring quarter as the coronavirus continues to damage travel demand. “We don’t know when it will happen, but we do know that Delta will be a smaller airline for some time, and we should be prepared for a choppy, sluggish recovery even after the virus is contained,” CEO Ed Bastian wrote in a staff note. “I estimate the recovery period could take two to three years. i hope it’s sooner, but we need to be realistic in our planning.” AT&T said its first quarter earnings took a $0.05 hit due to the coronavirus, with advertising sales hit severely due to the postponement of major sporting events like March Madness. Chipotle shares are up 11% this morning after it reported digital sales more than doubled in March, helping the burrito chain report positive same-store sales growth even as social distancing measures roil the restaurant industry. And Kimberly-Clark delivered a Q1 earnings beat as demand for toilet paper skyrocketed amid the coronavirus shelter-in-place mandates. “A combination of increased consumer demand for our products and strong execution by our teams is reflected in our first quarter results,” Mike Hsu, CEO of the consumer staples giant, said in a news release.
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Novavax Inc (NASDAQ: NVAX): Novavax shares are up nearly 20% over the last week after the biotech announced that it will be starting Phase 1 testing for its COVID-19 vaccine, NVS-CoV2373, in Australia in the coming weeks. “The urgent global race to develop a vaccine against the COVID-19 pandemic drove our rapid identification and selection of an optimal, highly immunogenic vaccine candidate,” said Novavax CEO Stanley C. Erck. The Phase 1 human trial of NVS-CoV2373 is expected to begin in mid-May with preliminary immunogenicity and safety results in July.