Plus, oil snapped its five-day winning streak, Uber is laying off 14% of its workforce, Disney saw $1.8 billion in lost profit last quarter due to the coronavirus, while General Motors managed to eke out a profit.
Stocks were higher to start Wednesday with the Dow adding 86 points, or 0.4%. The S&P 500 gained 0.5%, while the Nasdaq rose 1.3%.
ADP reported private payrolls hemorrhaged 20.2 million jobs in April as the coronavirus pandemic kept businesses closed and consumers home. ADP said the payroll declines were widespread and hit almost all sectors. Small businesses shed 6 million jobs, while medium and large companies laid off a combined 14 million workers. “Job losses of this scale are unprecedented,” said Ahu Yildirmaz, co-head of the ADP Research Institute. “The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession.” The market now looks to Friday’s jobs report from the Labor Department, which St. Louis Federal Reserve President James Bullard says is likely to be one of the worst reports in American history. “The unemployment rate is going to be extremely high,” Bullard said. “We think 20% isn’t unlikely, could even be higher than that… It’s not surprising. It’s a pandemic.”
Oil snapped its five-day winning streak, with West Texas Intermediate crude dropping as low as $22.58 per barrel and Brent crude dropping to a low of $29.51 per barrel as oversupply concerns outweighed optimism over a pick-up in demand. Rystad Energy’s Bjornar Tonhaugen argued that a price drop was inevitable given that economies are just starting to open up and the oil being produced today isn’t being sent to refiners, but is instead being pumped into storage tanks, which are filling up. “Traders understood that despite all the positive vibes, something does not complete the picture and it’s called crude stock builds,” Tonhaugen wrote in a note. “Indications show that for yet another week, storage is continuing to full up, despite the shut-ins and the output cuts. Demand, which indeed now is on the recovery road, is not yet enough to balance the predicted oil and that oil has to go somewhere. But well… we are running out of somewhere!”
As coronavirus cases surpass 1.2 million in the U.S., President Donald Trump said Americans should start getting back to normal life even if it leads to more sickness and more death. “Will some people be affected? Yes. Will some people be affected badly? Yes,” Trump said. “But we have to get our country open and we have to get it open soon.” Trump added this morning that the White House’s coronavirus task force will keep working “indefinitely,” and will shift its focus toward economic recovery and vaccine development. In other coronavirus news, a new study from the Los Alamos National Laboratory said that the coronavirus has mutated, and the new strain spreading across the U.S. appears to be even more contagious than the original virus. “This is hard news,” said Bette Korber, a computational biologist at Los Alamos and the lead author of the study. “But please don’t be disheartened by it. Our team at LANL was able to document this mutation and its impact on transmission only because of a massive global effort of clinical people and experimental groups, who make new sequences of the virus (SARS-CoV-2) in their local communities available as quickly as they possibly can.”
Uber shares are down more than -2% this morning after the ride-hailing giant said it will lay off 3,700 workers, or around 14% of its workforce, and that CEO Data Khosrowshahi will forgo his base salary for the rest of the year as the company has been hit hard by the coronavirus pandemic. Khosrowshahi also hinted in a memo to employees that more cost cuts are on the way. “We are looking at many scenarios and at each and every cost, both variable and fixed, across the company,” the Uber CEO said, adding that the company will give employees “a further, final update” within the next two weeks. “We want to be smart, to move fast, to retain as many of our great people as we can, and treat everyone with dignity, support and respect.” Wedbush analyst Dan Ives said of the news, “On the other side of this dark valley, the Uber business model will likely look a lot different for the next few years (at least) and the company must rationalize costs and a smaller operation to focus on attaining profitability in this ‘new normal’ backdrop. On the ride sharing front, Uber and Lyft face Herculean-like challenges looking ahead as the new reality will likely change the business models of these companies (and competitors) for the foreseeable future.”
In earnings news, Disney reported late yesterday that the coronavirus crisis cost it as much as $1.4 billion in lost profit in the last quarter, with earnings plunging by more than half to $0.60 per share. “This quarter is kind of a black hole,” said Dave Heger, an analyst with Edward Jones, who added that he expects Disney’s parks to remain closed for “most if not all” of the next quarter. “They’re just in the mode of getting through the quarter, and by September, they can ramp back up It’s anybody’s guess right now how quickly that can occur.” General Motors managed to eke out a $294 million profit for the first quarter despite the coronavirus pandemic, which has shuttered factories and devastated sales. “We have a track record of making swift, strategic and tough decisions to ensure our long-term viability and create value for all of our stakeholders,” said CEO Mary Barra in GM’s earnings release. “We are focused on preserving liquidity and taking the right actions today to make the company stronger and more competitive in the long term as we navigate through these unprecedented times,” said CFO Dhivya Suryadevara.
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TG Therapeutics (NASDAQ: TGTX): TG Therapeutics shares rocketed as much as 36% higher yesterday after it announced positive topline results from its global UNITY-CLL Phase 3 rial evaluating the combination of umbralisib plus ublituximab (U2) compared to obinutuzumab plus chlorambucil in patients with previously untreated and relapsed/refactory chronic lymphocytic leukemia (CLL). “We could not be more excited to share the positive topline results. As a company we have been focused on developing the best possible treatments, including novel combinations for individuals with B-cell diseases, and today’s announcement truly marks the culmination of years of hard work and a major step forward in our mission,” said Michael S. Weiss, Executive Chairman and CEO of TG Therapeutics. “This outcome sets the stage for the potential approval of U2 as a novel, chemotherapy-free, treatment regimen for patients with CLL, whether they have relapsed from or are refractory to a prior therapy or have never been treated before. We are extremely pleased with the performance of U2 in this study and very happy we were able to stop the study at this interim analysis due to the superior efficacy observed. We want to thank the patients, their families, and the doctors and research teams who participated in this trial, as well as our extraordinary team at TG who made this study a success. We look forward to submitting this data to the FDA and presenting the full results at a major medical meeting targeted by year-end 2020.”