Charles Schwab Shares Jump After Its TD Ameritrade Acquisition Clears Antitrust Hurdle

Plus, weekly jobless claims came in at 1.877 million, the FDA issued emergency use authorization for Roche’s blood test to identify those at risk of having the most severe immunological response to the coronavirus, and Simon Property Group is suing Gap for missed rent.

Stocks were slightly higher to start Thursday with the Dow adding 77 points, or 0.3%. The S&P 500 traded just above the flatline, while the Nasdaq Composite gained 0.2%. The Nasdaq 100 traded 0.3% higher to a record high, making it the first major U.S. stock index to fully erase its losses from the coronavirus pandemic sell-off.

Weekly jobless claims for unemployment benefits totaled 1.877 million last week, far above economists estimates for 1.775 million new claims. Still, this is the first report since March 14 where weekly jobless claims came in under 2 million, indicating the worst may be over for the coronavirus jobs crisis. “Even as states reopen, claims in the millions are an indicator that the economic pain of the COVID-19 crisis is still acute,” said Daniel Zhao, senior economist at Glassdoor. Continuing claims, or the total number of Americans claiming unemployment benefits, rose to 21.5 million, compared to estimates for a decline. “Stubbornly elevated jobless claims are yet another statistic showing that labor market recovery will not be swift,” said Yelena Shulyatyeva, a Bloomberg economist. “The latest claims data comes on the back of the non-manufacturing ISM survey, which showed the employment subindex barley budged in May from a record low in April, contradicting the signal from a better-than-expected ADP employment” figure from yesterday.

As peaceful protests continued yesterday and last night, President Donald Trump faced criticism from both his present and former defense secretaries over his threat to use military force to quell the nationwide demonstrations. Current Defense Secretary Mark Esper said he did not support invoking the 1807 Insurrection Act to bring in the military to put down the protests, angering White House officials who saw the statement as breaking rank. Former Defense Secretary Jim Mattis, meanwhile, accused Trump of trying to divide the American people in an statement where the General said that he is “angry and appalled” over the handling of the protests. “Donald Trump is the first president in my lifetime who does not try to unite the American people – does not even pretend to try,” Mattis wrote in the unprecedented and searing rebuke. “Instead he tries to divide us. We are witnessing the consequences of three years of this deliberate effort. We are witnessing the consequences of three years without mature leadership.” Trump, in response, lashed out in a pair of tweets mocking Mattis’s military service, calling Mattis “the world’s most overrated General.”

As the coronavirus epidemic in the U.S. continues to expand, former FDA Commissioner Dr. Scott Gottlieb said the nation still doesn’t have the test and trace infrastructure needed in place to prevent a major second wave in the fall. “I don’t think we have everything we need in place,” Gottlieb said. “We’re going to have the testing in place, the capacity to run the testing. I think we still have a challenge with collection sites, moving the testing into places where people are at risk.” Gottlieb added that without the necessary infrastructure in place, the U.S. will see a “slowly expanding epidemic all through the summer. We’re heading into the fall with a lot of infection in this country. That’s going to create risk to the fall and winter.” The FDA issued emergency use clearance for Roche Holding’s test to detect COVID-19 in patients who are most at risk of an extreme immune reaction. Roche’s Elecsys IL-6 blood test can identify patients who carry the virus and who may develop respiratory distress and require intubation within 18 minutes, the company said. “Time is specifically critical,” said Thomas Schinecker, the head of Roche’s diagnostics unit. “The test could help physicians in the quick identification of severe inflammatory response.”

Charles Schwab shares are up nearly 2% this morning after the online broker received antitrust approval from the Justice Department for its acquisition of TD Ameritrade. Charles Schwab announced the deal for TD Ameritrade last November, and said Thursday that it expects to close the deal in the second half of the year. While there had been concerns that the consolidation of the two companies would flag antitrust issues, the combined business will capture only around 11% f client assets in the retail financial services market, Schwab said. The industry’s next approval will likely be Morgan Stanley’s acquisition of E*Trade which is not expected to flag any antitrust issues.

And Simon Property Group, the largest mall owner in the nation, is suing Gap after it said the retailer failed to pay more than $65.9 million in rent and other charges due to the coronavirus pandemic. Simon malls have 412 Gap stores, including Banana Republic and Old Navy, making Gap the mall owner’s biggest in-line tenant at its malls in terms of rent. Gap warned in April that it had stopped paying rent on stores that were closed due to the ongoing pandemic and noted that litigation could arise as a result of the skipped payments. “Although we believe that strong legal grounds exist to support our claim that we are not obligated to pay rent for the stores that have been closed… there can be no assurance that such arguments will succeed,” Gap said in a filing with the SEC.

Stocks We’re Watching

Cinedigm Corp (NASDAQ: CIDM): Cinedigm shares are up more than 143% at the time of writing after the entertainment company announced a partnership with Vewd, the world’s largest Smart TV OTT software provider, to offer Cinedigm’s portfolio of streaming entertainment networks on Vewd-enabled devices worldwide. “With Global ad-supported OTT revenues surging to $53 billion globally over the next five years, our focus is on rapidly expanding our distribution footprint to maximize growth,” said Erick Opeka, President of Cinedigm Networks. “Vewd helps us dramatically expand the viewer base for our rapidly growing portfolio of OTT networks, which we expect to double over the next 18 months.”