Weekly Jobless Claims Show The Slowest Pace Of Decline Since Early April

Plus, former FDA Commissioner Dr. Scott Gottlieb said states seeing surges of new coronavirus cases are “on the cusp of losing control” of their outbreaks, Wirecard shares are down after the German payments company said auditors couldn’t confirm the existence of $2.1 billion of cash on its balance sheet, and Spotify shares are up after it inks another big podcast deal.

Stocks fell to start Thursday with the Dow dropping 131 points, or 0.5%. The S&P 500 traded 0.2% lower, while the Nasdaq was flat.

Weekly jobless claims came in higher than expected, totaling 1.5 million last week. Last week’s figure marks a decline of new claimants of just 58,000 compared to the week before, marking the slowest pace of decline on a percentage basis since early April even as all states in the U.S. have reopened to some degree. “The 58K drop in claims this week is very disappointing, given that the level still remains so high; the worst single week after the crash of 2008 saw claims at 665K,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “It’s not clear why claims are still so high; is it the initial shock still working its way up through businesses away from the consumer-facing jobs lost in the first wave, or is it businesses which thought they could survive now throwing in the towel, or both? Either way, these are disappointing numbers and serve to emphasize that a full recovery is going to take a long time.”

Coronavirus latest: as new cases surge in several states in the American South and West, former FDA Commissioner Dr. Scott Gottlieb said that some of the hardest-hit areas are “on the cusp of losing control.” Gottlieb said to CNBC this morning, “The question is ‘can we keep this from getting out or control.’ This is a virus that wants to infect a very large portion of the population. They’re on the cusp of losing control of those outbreaks in certain parts of those states. Arizona, Houston, Austin, parts of Florida certainly look very concerning right now.” Cases have been on the rise since the Memorial Day weekend in states including Arizona, Arkansas, Florida, Texas, and Utah, among others. “We expected cases to go up as we reengaged in social activity, but it’s gone up more than we predicted,” Gottlieb said. “Certain states have been slower to reopen. Other states have been much more aggressive. The states that were aggressive are the states where we’re seeing these outbreaks right now.” And in bad news for football fans, Dr. Anthony Fauci, a member of the White House coronavirus task force, said the 2020 NFL and college football seasons may have to be canceled if there is a second wave of the deadly virus. “Unless players are essentially in a bubble—insulated from the community and they are tested nearly every day—it would be very hard to see how football is able to be played this fall,” Fauci said to CNN.

Carnival shares are down more than -1% this morning after the world’s largest cruise operator reported it lost $3.30 per share in its fiscal second quarter on an adjusted basis, worse than consensus estimates for a loss of $1.52 per share. In its second quarter, Carnival saw revenues of $700 million, down from $4.8 billion in the same period last year. The results go to show the damage wrought by the coronavirus pandemic on the cruise industry since March. Carnival said that it is consulting “and working in close cooperation with various medical policy experts and public health authorities to develop enhanced procedures and protocols for health and safety onboard its ships,” and while cruise ships are still not cleared to operate, the company said that it “is seeing growing demand from new bookings for 2021.”

Wirecard shares are down more than -60% today after the German payments giant postponed its annual results and said auditors couldn’t confirm the existence of 1.9 billion euros ($2.1 billion) in cash on its balance sheet. Wirecard said in a statement this morning that its auditor, Ernst & Young in Munich, found “no sufficient audit evidence” of the 1.9 billion euros, indicating “spurious balance confirmations that had been provided from the side of the trustee respectively of the trustee’s account holding banks to the auditor in order to deceive the auditor and create a wrong perception of the existence of such cash balances or the holding of the accounts for to the benefit of Wirecard group companies.” Of the beleaguered payments company, Deka analyst Ingo Speich said “we are stunned” and said new management personnel was more urgent now than ever for Wirecard, while Mirabaud analyst Neil Campling said today’s developments could have far-reaching consequences for the company’s ability to operate worldwide. “Wirecard’s repeat could be terminal,” Campling said.

And Spotify shares are up 12% today after the company said it has inked a new deal with DC and Warner Bros. to exclusively produce and distribute a new slate of narrative scripted podcasts featuring popular comic book characters. The deal includes the intellectual property of the entire DC universe, including Superman, Wonder Woman, Batman, The Joker, and Harley Quinn franchises, among others. Spotify has made several high-profile moves in the podcast space recently, including inking an exclusive license for The Joe Rogan Experience in May, and an exclusive podcast deal with Kim Kardashian West earlier this week. 

Stocks We’re Watching

Fulgent Genetics Inc (NASDAQ: FLGT): Fulgent Genetics shares gained as much as 17% yesterday after the genetic testing solutions company announced it has launched an at-home testing solution for COVID-19, and has received Emergency Use Authorization from the FDA for the test’s use in the U.S. “We are pleased to be able to offer a convenient and readily available COVID-19 testing solution for individuals at risk of contracting the virus,” said Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics. “As the coronavirus continues to spread, options for testing remain limited and many eligible individuals are unable to get the testing they need. We believe our at-home testing service will both enable at-risk individuals, particularly those at the front lines of this pandemic, to more readily access testing solutions, while potentially offering a solution for organizations to screen employees as they return to work.”