Plus, another 2.1 million Americans applied for unemployment benefits last week, Trump is expected to sign an executive order to crack down on liability protections for social media platforms, and Abercrombie shares are down after the mall-staple reported a 34% drop in sales in the first quarter.
Stocks were higher to start Thursday with the Dow adding 67 points, or nearly 0.3%. The S&P 500 gained 0.4%, while the Nasdaq traded 0.45% higher.
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Another 2.1 million Americans applied for unemployment benefits last week, bringing the total amid the coronavirus pandemic to more than 40 million. But it’s not all bad news in this week’s jobs report, as it market the eighth straight week-over-week decline in new claims. Also good news, continuing claims fell to 21.05 million, down by 3.86 million from the week prior. “The data still point to a pretty significant loss of jobs but at least the numbers are moving in the right direction,” said Aneta Markowska, chief financial economist at Jefferies Group. “Even though initial claims are still very elevated, the fact that continuing claims are declining means businesses are actually bringing a lot of workers back in and that is more than offsetting the new filings.”
The U.S. reached a grim milestone: 100,000 dead from the coronavirus, just 126 days since the first case and 87 days since the CDC announced the first fatality on February 29. In treatment news, Roche is teaming up with Gilead Sciences on a late-stage trial of a two-drug combination of Roche’s immune suppressor Actemra and Gilead’s antiviral remdesivir, with the results of the combination treatment compared to those from patients who just receive remdesivir and a placebo. The companies will begin enrolling as many as 450 patients in the U.S., Canada, and Europe in June. Roche’s Actemra is a drug used to counter harmful inflammation and is often used to treat rheumatoid arthritis. Other drugmakers experimenting with anti-inflammatory treatments for COVID-19 include AstraZeneca, GlaxoSmithKline, Regeneron Pharmaceuticals, and Sanofi.
Chinese lawmakers defied the U.S. by approving the proposal to impose a new national security law for Hong Kong, paving the way for the legislation to be finalized and implemented in the city. Ahead of the decision, protests reignited in Hong Kong, with large crowds out in force in the territory following last Friday’s introduction of the legislation. While details of the law are still scarce, it will now more to the Standing Committee to work out the implementation details which are expected to target secession, subversion of state power, terrorism activities, and foreign interference. The U.S. said yesterday that it can no longer certify Hong Kong’s autonomy, a move that could trigger sanctions on Chinese officials or revoking the city’s special trading status.
President Donald Trump is expected to sign an executive order today that will crack down on liability protections for online social media platforms including Twitter, Facebook, and Google, just days after Twitter began fact-checking some of Trump’s tweets. The order will push the FCC to write rules on when and how platforms can remove content from their platforms and still maintain liability protection granted to them under Section 230 of the Communications Decency Act. More specifically, Trump wants the government to now define what it means for social media companies to act in bad faith when dealing with questionable content, opening up such platforms to lawsuits. Meanwhile, Twitter CEO Jack Dorsey stands by the company’s decision to fact-check two of Trump’s tweets. “This does not make us an ‘arbiter of truth,’” Dorsey tweeted. “Our intention is to connect the dots of conflicting statements and show the information in dispute so people can judge for themselves. More transparency from us is critical so folks can clearly see the why behind our actions.”
And Abercrombie & Fitch shares are down nearly -5% this morning after the clothing retailer reported that its sales tanked 34% during the first quarter due to store closings amid the coronavirus crisis. The company reported an adjusted loss of $3.29 per share on revenue of $485.4 million, down from $734 million in the same quarter last year. Sales at its namesake Abercrombie brand were down 30%, while its Hollister brand sales were down 36%. CEO Fran Horowitz said that around half of Abercrombie’s global store base, or 409 shops, are now back open for business, and said that in the U.S., “we are encouraged by recent results, with customers returning to stores at an even quicker pace than in China.” Horowitz added, “While this year is a lost one across the space from an earnings perspective, we do see improved underlying brand health.”
Stocks We’re Watching
StoneCo Ltd (NASDAQ: STNE): StoneCo shares jumped as much as 29% yesterday after the Brazilian payments processor reported better-than-expected Q1 earnings. StoneCo’s e-commerce volume in May has already returned to 87% of what was seen before the coronavirus pandemic, and Susquehanna analyst James Friedman says volume may be growing to nearly 80% year-over-year. “A combination of their quick pivot to enabling e-commerce for their merchants—coupled with a footprint in less affected regions—is enabling a faster than expected recovery,” Friedman wrote in a note where he raised his price target on the stock from $28 to $34.
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