Plus, jobless claims came in above 1 million for the 16th straight week, the U.S. surpassed 3 million confirmed coronavirus cases, United Airlines warned 36,000 employees of possible furloughs, and Walgreens reported disappointing earnings.
Stocks were lower to start Thursday with the Dow falling 400 points, or more than 1%. The S&P 500 dropped 1.2%, while the Nasdaq traded 0.6% lower.
New jobless claims came in above 1 million for the 16th straight week. The Labor Department reported this morning that claims for the week ended July 4 totaled 1.314 million, while continuing claims feel to 18.06 million. “Fundamentally, the fact that initial unemployment claims are still running over 1.3 million per week this far into the onset of the pandemic in the U.S., and the stubbornly high level of continuing claims, provides a cautionary message about the difficulties involved and the time it will take to heal a labor market thrown into turmoil by unprecedented circumstances,” said Josh Shapiro, chief U.S. economist at Maria Fiorini Ramirez, in a note. “The road back to February’s peak employment levels will be a long and bumpy one.”
The U.S. surpassed 3 million confirmed coronavirus cases as global cases topped 12 million. White House health advisor Dr. Anthony Fauci said today that states that are seeing rapidly growing COVID-19 outbreaks should consider “shutting down” again as they did back in March. “What we are seeing is exponential growth,” Fauci said on a Wall Street Journal podcast. “It went from an average of about 20,000 to 40,000 and 50,000. That’s doubling. If you continue doubling, two times 50 is 100. Any state that is having a serious problem, that state should seriously look at shutting down.” Fauci also added that the average age of infected people has fallen as new cases have skyrocketed, and that the more young people who are infected, the more likely they will pass the potentially deadly virus on to vulnerable people who are older or have underlying conditions. “To say that it’s benign is not true, because we’re already seeing the hospitalization going up in these states,” Fauci said. “We’re seeing the intensive care beds are now almost being fully occupied, so this is not inconsequential what’s going on. It’s having an impact.”
United Airlines shares are down nearly -7% this morning after the carrier warned Wednesday that around 36,000 front-line workers—or more than 45% of its domestic employees—may face furloughs as the coronavirus pandemic continues to roil demand for flights. The United announcement is the largest job cut announced by a U.S. airline, and comes as signs of a recovery in air travel fade with new travel restrictions and a surge in new cases. United is burning through $40 million in cash a day as it struggles to operate without a strong rebound in traffic. United isn’t the only airline warning of mass furloughs. American Airlines has said it may have to cut 20,000 jobs due to operational losses, while Delta has discussed widespread job cuts if demand doesn’t ramp up.
“Oof.” That’s Evercore ISI analyst Elizabeth Anderson’s reaction to Walgreens’ earnings this morning. Shares of the drugstore giant are down nearly -10% today after it reported that the pandemic hurt its fiscal third-quarter results as fewer people went to the doctor and got prescriptions. Walgreens said it anticipates full-year adjusted earnings between $4.65 and $4.75 per share, including a $1.03 to $1.14 per share of costs related to the COVID-19 pandemic. The drugstore chain said its profits were dragged down primarily by the United Kingdom, where foot traffic plummeted 85% in April, and Walgreens said it plans to cut around 4,000 jobs in the U.K. following the sharp drop in business in the country. “As a company we are facing significant challenges and are moving fast to overcome,” said CEO Stefano Pessina on a call with analysts.
And Bed Bath & Beyond shares are down more than -22% after the home goods retailer said its sales sank nearly 50% during its latest quarter and that it plans to permanently close roughly 200 of its namesake stores over the next two years, beginning later this year. Bed Bath & Beyond reported an adjusted net loss of $1.96 per share for its fiscal first quarter, while consensus estimates called for a loss of $1.27 per share. The company said it will also reduce its cost of goods and “drive supply chain transformation to address gross margin pressures” related to its e-commerce efforts. Through these actions and the store closures, Bed Bath & Beyond says it will see between $250 million and $350 million in future annualized savings, excluding one-time costs. While CEO Mark Tritton said the coronavirus pandemic hurt sales and put pressure on margins, especially amid a “substantial” consumer shift to online shopping, he added that the company is “encouraged by early customer response, including continued strong demand, in excess of 80%, across our digital channels during the month of June, bolstered by the expansion of our Buy-Online-Pick-Up-In-Store (BOPIS) and Curbside Pickup services. We believe Bed Bath & Beyond will emerge from this crisis even stronger, given the strength of our brand, our people and our balance sheet.”
Stocks We’re Watching
Pulmatrix (NASDAQ: PULM): Pulmatrix shares gained 12.6% yesterday after the clinical-stage biopharma stock announced that Sensory Cloud, which has licensed the rights to Pulmatrix’s NasoCalm proprietary formulations (PUR003 and PUR006), will commence commercial sales of NasoCALM—Pulmatrix’s over-the-counter nasal hygiene product—in September under the brand name FEND. “Scientists at Pulmatrix spent years developing and optimizing NasoCALM, which Sensory Cloud plans to market this Fall as the FEND OTC hygienic product with its Nimbus delivery device,” said Ted Raad, Chief Executive Officer of Pulmatrix. “Based on Pulmatrix and Sensory Cloud data, we believe FEND could be an important new option to provide effective hygiene for virus control in the current global healthcare crisis. We are excited about the potential benefit that may emerge with worldwide distribution and availability and look forward to Sensory Cloud’s commercial launch.”