Plus, the FDA is moving at “lightning speed” to review data on Gilead’s remdesivir treatment for COVID-19, Tesla CEO Musk decried stay-at-home orders in an expletive-filled earnings call rant, Macy’s plans to reopen all of its stores within the next six weeks, and American Airlines reported it lost more than $2.2 billion last quarter.
Stocks were lower to start Thursday, with the Dow falling 317 points, or 1.4%. The S&P 500 sank 1%, while the Nasdaq traded 0.3% lower.
The Labor Department said another 3.84 million Americans filed for unemployment last week, bringing the six-week total to more than 30 million amid the coronavirus crisis. While filings remain at unprecedented levels, the results show last week was the fourth week that the pace has decelerated, suggesting the worst of the labor market’s hit may have already occurred. However, job losses don’t appear close to ending any time soon as states and municipalities face severe budget crunches. In other economic data out this morning, U.S. personal spending plummeted the most on record in March as the coronavirus forced widespread shutdowns and job losses, with household outlays falling 7.5% from the month prior. Federal Reserve Chairman Jerome Powell encouraged the government to provide more stimulus to support the struggling economy in a press conference yesterday, highlighting that the “burdens are falling most heavily on those least able to carry them.”
Coronavirus cases in the U.S. have risen to at least 1,040,608. FDA Commissioner Stephen Hahn said that following encouraging results from a key U.S. trial, it is moving at “lightning speed” to review data on Gilead Sciences experimental COVID-19 treatment remdesivir. “We’re working with the company to emphasize the necessity of speed while at the same time to understand the data,” Hahn said. “There will be a lot of factors that go into all the regulatory decisions. We want to look at the totality of data to make sure that remdesivir is targeted to the right patients.” SVB Leerink analyst Geoffrey Porges said in a note that as promising a treatment as remdesivir looks to be, it’s a long way from a cure from the deadly virus. “Having a treatment for severe disease is very positive for our hospitals and health-care providers, and may reduce the demands on those institutions and providers, thus facilitating some relaxation of social distancing,” Porges wrote. “The benefit is not sufficient to justify abandonment of those guidelines and policies, but it may allow greater relaxation sooner, provided other public health infrastructure is in place.”
As social distancing guidelines begin to relax across the nation, Tesla CEO Elon Musk decried government-issued stay at home orders as “fascist” in an expletive-laced rant on the electric automaker’s Q1 earnings call yesterday afternoon. While answering questions about liquidity amid the coronavirus pandemic, Musk said shelter-in-place orders akin to “forcibly imprisoning people in their homes against all their constitutional rights.” Even amid the pandemic, Tesla delivered an earnings beat, posting a surprise profit of $1.24 per share in the first quarter, while analysts were expecting a loss of -$0.32 per share. In the first quarter, Tesla said in its earnings release that “At Gigafactory Shanghai, further volume growth resulted in a material improvement in margins of locally made Model 3 vehicles. In addition, Model Y contributed profits, which is the first time in our history that a new product has been profitable in its first quarter.”
Macy’s said this morning that it plans to reopen 68 of its department stores on Monday in states including Georgia and South Carolina where local governments are loosening stay-at-home restrictions. The retailer also expects to reopen all of its roughly 775 stores in the next six weeks, should coronavirus infection rates taper off and local governments allow retailers to resume normal business. Macy’s shares are down nearly -65% so far this year as the department store giant has seen a drop-off in sales amid the coronavirus crisis. The retailer said it has been offering curbside pickup at roughly 20 Macy’s locations for the past week in an effort to drive sales.
In other earnings news, Coach-parent Tapestry shares are down -9% this morning after the retailer reported a nearly 20% drop in quarterly sales in its fiscal third quarter report as the coronavirus forced the closure or limited operation of 90% of its stores. “No one is immune to the effects of this one hundred year storm,” said Tapestry CEO Jide Zeitlin, adding that the coronavirus crisis materially weakened the company’s results in the period. McDonald’s reported its Q1 earnings fell 17% as the pandemic led to restaurant closures and plunging sales. The fast food giant said net sales dropped 6% in the quarter to $4.71 billion as the company saw “dramatic changes in consumer behavior” stemming from the pandemic. Comcast shares are down around -5% after the cable and internet giant reported a nearly 40% drop in Q1 profit, despite significant bumps in its cable and broadband divisions as the nationwide coronavirus shutdowns forced customers to stay home. Comcast reported headwinds in its film and theme park divisions, and said if theme parks remain closed through June, the company will lose about $500 million. And American Airlines reported it lost more than $2.2 billion in the first quarter, its biggest quarterly loss since 2008, as the pandemic crushed demand for air travel. The airline’s revenue dropped nearly 20% year-over-year to $8.52 billion. “Never before has our airline, or our industry, faced such a significant challenge,” American Airlines CEO Doug Parker said in the earnings release.
Stocks We’re Watching
TherapeuticsMD Inc (NASDAQ: TXMD): TherapeuticsMD shares rocketed as much as 86% yesterday after the company announced that the United States Patent and Trademark Office (USPTO) had issued a patent that covers the labeled indication for its contraceptive device, ANNOVERA. “The issuance of this patent strengthens the intellectual property protection for ANNOVERA, providing Orange Book-listed patent protection through 2039. This is an important step in the ongoing development of the patent portfolio for ANNOVERA,” said TherapeuticsMD Chief Executive Officer, Robert Finizio.