Plus, Dick’s Sporting Goods reported a 30% decline in same-store sales, and Stitch Fix is laying off 1,400 workers.
Stocks were higher Tuesday with the Dow up 200 points, or 0.8%. The S&P 500 added 0.4%, while the Nasdaq traded 0.2% higher.
As the country braced for another night of protests, President Donald Trump threatened to deploy the military if states and cities failed to put down the demonstrations. “I am mobilizing all federal and local resources, civilian and military, to protect the rights of law abiding Americans,” Trump said at an address at the White House. “Today, I have strongly recommended to every governor to deploy the National Guard in sufficient numbers that we dominate the streets. Mayors and governors must establish an overwhelming presence until the violence is quelled. If a city or state refuses to take the actions necessary to defend the life and property of their residents, then I will deploy the United States military and quickly solve the problem for them.” His statements came after a conference call earlier in the day with governors where Trump told state leaders, “You have to dominate, if you don’t dominate you’re wasting your time. They’re going to run over you, you’re going to look like a bunch of jerks.” But the president’s words did little to calm the protests, and even with curfews imposed across the country, demonstrators still took to the streets.
Despite the continued chaos, stocks were higher to start the day. “At the end of the day, the market has no conscience,” said CNBC’s Jim Cramer. “Investors are simply trying to make money, and that’s why they’re crowding the stay-at-home economy stocks. Because the stay-at-home economy just got a major extension for many investors [and], right or wrong, thoughtless or cerebral, it’s worth exploiting.” As major corporations commit to millions of dollars in contributions to organizations pursuing justice, AT&T CEO Randall Stephenson urged fellow chief executives to speak up for racial justice. “All of us CEOs have large African-American employee bodies. We owe it to them to make sure that we’re speaking to this, that we’re asking our policy makers to step up, that we’re asking our political leaders to step up and recognize and just say it: We’ve got a problem,” Stephenson said. “We have a big problem and it needs to be dealt with.”
Economic activity has been cut by more than half in the second quarter, according to a gauge employed by the Atlanta Federal Reserve. The GDPNow outlook is showing a 52.8% fall for real GDP growth in the second quarter as the coronavirus continues to wreak havoc on the economy. Yardeni Research’s Ed Yardeni said that the steep slide could point to a sharper recovery with a possible 20% rebound in the third quarter followed by a 5% gain in the fourth quarter. Still, Yardeni wrote in a note, “we don’t expect that real GDP will recover back to its Q4-2019 record high until late 2022.”
Dick’s Sporting Goods shares are up slightly this morning even after the retailer reported a nearly 30% decline in same-store sales in the first quarter as the coronavirus forced store closures. But it wasn’t all bad news. Dick’s said that since March 18, e-commerce sales have surged 210% as people stuck at home stocked up on weights, workout clothes, and other fitness gear to workout at home. The company said it believes it will see a benefit as stores reopen and “health and fitness will become even more important to the consumer.” CEO Ed Stack added in a statement, “Although the business environment of 2020 remains uncertain, DICK’S Sporting Goods is in a position of strength. We believe coming out of the current crisis, health and fitness will become even more important to the consumer. As the leader in the sporting goods retail sector, our relationships with key brands have never been stronger and we are in a great place to support this demand. Our experienced management team has a history of successfully navigating difficult market cycles and remains fully committed to managing our business with a long-term view. Perhaps most importantly, our balance sheet is strong, and due to the actions taken when the pandemic first hit, we have enhanced liquidity to emerge from this crisis in an even stronger competitive position. Now, with confidence in our liquidity position and our stores re-opening, we can turn our attention to gaining market share for the remainder of 2020 and positioning our business for profitable growth in 2021.”
Stitch Fix shares are up more than 1% after the online retailer and wardrobe styling service said it would lay off 1,400 stylists in California between now and the end of September as it moves to hire 2,000 stylists in other locations throughout the country with lower costs of living than cities in California. CEO Katrina Lake said in a statement, “We have taken the very difficult decision to reduce the number of Stylists in our styling team in California, as we invest in our other styling hubs across the U.S., and the innovations that will help evolve our experience in the future. All of our California-based stylists will be offered the opportunity to relocate to the new roles in other states. Any decision that impacts our hardworking and talented people is incredibly tough, but we believe this is the right thing to do for our business.”
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Emergent Biosolutions (NYSE: EBS): Emergent Biosolutions shares jumped 12% yesterday after the biotech announced it has landed an expanded contract with the Biomedical Advanced Research and Development Authority valued up to $628 million. Under the agreement, Emergent will provide manufacturing support for coronavirus vaccine candidates through 2021 in an effort to create “a U.S.-based manufacturing supply chain for pharmaceutical and biotechnology innovators of COVID-19 vaccine candidates,” the company said in its announcement. “Emergent is proud of this expanded BARDA partnership that symbolizes confidence in our development and manufacturing capabilities that have served the U.S. government’s needs for more than two decades,” said Robert G. Kramer Sr., president and CEO of Emergent BioSolutions. “Our longstanding record of delivering safe and effective medical countermeasures for public health positions us to continue to help at this critical moment by advancing COVID-19 vaccine programs of our fellow innovators in the industry.”