Plus, the House passed the $484 billion small business aid package, consumer confidence fell for the third straight month, and AT&T’s Stephenson is out as CEO.
Stocks hovered around the flatline to start Friday with the Dow adding 28 points, or 0.1%. The S&P 500 and Nasdaq both gained 0.3%.
The House passed the $484 billion aid package to bolster small businesses and hospitals amid the coronavirus crisis on Thursday. The bill now goes to President Donald Trump for signature, and once signed, the legislation will bring the government’s coronavirus emergency response to an unprecedented total of more than $2.5 trillion across four bills. And with that, House Speaker Nancy Pelosi is gearing up for another round of aid for the economy that includes a long and expensive wish list from her fellow Democrats that would expand the social safety net, while Senate Majority Leader Mitch McConnell hasn’t committed to another large aid package, and has indicated he’s preparing for a massive fight over aid to states, expressing this week that he prefers to allow states to declare bankruptcy over providing them with relief. But Democrats may have an unlikely ally: Trump, who’s reelection may hinge on the economy turning around in the second half of the year, and who has indicated he’s willing to include state aid and other spending into the next round of stimulus.
Consumer confidence fell for a third straight month, falling to 71.8 in April from 89.1 in March as shoppers weigh the coronavirus pandemic and subsequent sharp drop in economic conditions. “Consumers’ reactions to relaxing restrictions will be critical, either putting further pressure on states to reopen their economies, or exerting added pressure to extend the restrictions even if it has negative consequences for economic prospects,” said Richard Curtin, chief economist for the Surveys of Consumers. “The risks associated with these decisions are not equally balanced, with an incorrect decision to reopen having serious repercussions. The necessity to reimpose restrictions could cause a deeper and more lasting pessimism across all consumers, even those in states that did not relax their restrictions.”
Coronavirus latest: cases in the U.S. have risen to more than 870,400, and a trio of reports from Harvard, Johns Hopkins, and former U.S. FDA Commissioner Scott Gottlieb said that the country will need to test 20 million people per day for the virus, hire an army of contact tracers, and expand healthcare coverage before it can safely reopen the economy. Meanwhile, the Food and Drug Administration warned consumers this morning against taking chloroquine and hydroxychloroquine to treat COVID-19 outside of a hospital or formal clinical trial setting after “serious” poisoning and deaths were reported. The FDA said it had become aware of reports of “serious heart rhythm problems” in patients with the virus who were treated with the malaria drugs. “We will continue to investigate risks associated with the use of hydroxychloroquine and chloroquine for COVID-19 and communicate publicly when we have more information,” the FDA wrote in the notice. In more negative news for the drugs, researchers cut short a study of chloroquine as a potential treatment for COVID-19 citing a “primary outcome” of death after some patients developed irregular heart rates and nearly two dozen died after taking daily doses of the drug.
JCPenney is reportedly moving toward a bankruptcy filing. The embattled retailer is in talks with banks for a loan of $800 million to $1 billion to sustain at least some operations during the bankruptcy process, according to a report from the Wall Street Journal. JCPenney skipped an interest payment on a bond due on April 15, saying it would use its 30-day grace period before default to explore its options, as the coronavirus pandemic has all-but halted its turnaround plan. Speaking of bankruptcy, privately held department store Neiman Marcus is expected to file as soon as Sunday and is reportedly in talks with current lenders about raising around $600 million in emergency financing to fund operations through the restructuring. In bankruptcy, the luxury department store will work to flush more than $4 billion of debt leftover from its sale to Ares Management and Canada Pension Plan Investment Board in 2013 that has kept it from investing in technology to compete with online luxury start-ups like Net-a-Porter, and Farfetch.
And Randall Stephenson is out as AT&T’s CEO after activist investment firm Elliott Management pushed for executive changes at the cell provider. President and COO John Stankey will take over the helm on July 1, months earlier than expected, which Elliott said it “supports.” “We have been engaged with the company throughout the search process, which was a robust one, including a range of highly qualified outside candidates and overseen by independent directors,” said Elliott partner Jesse Cohn in a statement. Stankey will take over AT&T as the company navigates the coronavirus pandemic while juggling a massive debt load of $200 billion, a significant loss of subscribers for its DirecTV, and its entrance into the streaming space with the upcoming launch of HBO Max.
Stocks We’re Watching
Cassava Sciences Inc (NASDAQ: SAVA): Nano-cap Cassava Sciences jumped as much as 36% yesterday after it announced that it has been awarded a new $2.5 million research grant award from the National Institutes of Health (NIH) to support the on-going clinical evaluation of its investigational drug PTI-125 for the treatment of Alzheimer’s disease. “We are once again most grateful to the NIH for its support of the clinical evaluation of PTI-125,” said Cassava President and CEO Remi Barbier. “This new research grant award will support our on-going open-label study of PTI-125 in patients with Alzheimer’s disease.”