Plus, jobless claims came in higher than 1 million for the seventeenth week in a row, security experts warned Russian hackers are trying to steal COVID-19 vaccine research, Morgan Stanley reported better-than-expected earnings, and Tesla shares are down after a report that its vehicle registrations were down by nearly half in the second quarter.
Stocks fell to start Thursday with the Dow falling 60 points, or 0.2%. The S&P 500 slid 0.6%, while the Nasdaq traded 1.3% lower.
For the 17th week in a row, more than 1 million Americans filed for unemployment claims last week. The Labor Department reported this morning that initial weekly jobless claims came in at 1.3 million for the week ending July 11, pushing total initial claims since March to more than 51 million. Last week’s reading of 1.3 million was down just 10,000 from the week prior, the smallest decline since March, while continuing claims came in at 17.3 million, indicating economic pain remains widespread. “There are clear signs that the longer-term damage is beginning to mount, with permanent layoffs beginning to climb, and the flow of workers from employment to unemployment still elevated,” said Michael Pearce, senior U.S. economist at Capital Economics, in a note. “Moreover, absent a vaccine, the need for ongoing physical distancing will prevent a full recovery.” Barclays Plc. chief U.S. economist Michael Gapen added, “The jobless claims data suggests that further gains from here will be much harder to achieve. The retail sales data tell us something about how households emerged from lockdown between mid-May and the end of June, but the jobless claims data are telling us something about their ability to carry that forward into July and August against a backdrop where it’s unclear whether additional federal benefits payments are forthcoming.”
As confirmed coronavirus cases in the U.S. rise to more than 3.5 million, two big stories have emerged this morning. The first is that previously public coronavirus data has already disappeared after the Trump administration quietly shifted control of the information from the CDC to the Department of Health and Human Services. “What worries me is that we seem to be pushing rather suddenly in the midst of what feels like a very urgent time in terms of surging cases that we’re seeing across the country,” said Dr. Jennifer Nuzzo, an epidemiologist at Johns Hopkins University. “The question is, what are we going to lose in this transition, and in particular at a moment where we really don’t want to lose any ability to understand what’s happening in hospitals. I think it’s reasonable to worry that it could lead to erosion of capabilities at a moment where we very much can’t afford to lose any abilities at this point. I don’t fully understand how it’s going to work. That in and of itself is problematic.” The other big coronavirus story this morning is that security officials have found that hackers linked to Russian intelligence services are trying to steal information about COVID-19 vaccine research in the U.S., Canada, and the U.K. Officials say the group known as APT29—otherwise known as “Cozy Bear”—is targeting international research centers that are racing to develop a vaccine for the deadly virus and that the attacks are ongoing.
In other hacking news, Twitter shares are down nearly -1% this morning following yesterday’s attack on high-profile Twitter accounts, including those of Amazon CEO Jeff Bezos, Democratic presidential candidate Joe Biden, former President Barack Obama, and Tesla CEO Elon Musk, as well as the corporate account of Apple. The hacked accounts displayed tweets telling followers to send bitcoin to a specific address, promising to double any payments sent. “We detected what we believe to be a coordinated social engineering attack by people who successfully targeted some of our employees with access to internal systems and tools,” Twitter said from a support account. “We know they used this access to take control of many highly-visible (including verified) accounts and Tweet on their behalf.” Theresa Payton, a former White House chief information officer and the current CEO of Fortalice Solutions, warned that direct messages may also have been stolen from the affected accounts and could be released or used in the future. “They’re going to need to apologize to the VIPs and to the individuals who were defrauded and fell for the scam,” Payton said. “The next thing they’re going to need to do is to conduct a thorough and transparent investigation, and they’re going to need to share what they can about who the attackers were and how they pulled this off.”
On the earnings front, Morgan Stanley posted an earnings beat, reporting record profit of $3.2 billion, or $1.96 per share – far above estimates for $1.12 per share. The global investment bank and wealth management business benefited from one of Wall Street’s best trading quarters in years, with its trading division gaining $1.4 billion more revenue than analysts had expected. Bank of America reported that its second quarter earnings were bolstered by stronger-than-expected bond trading and investment banking revenue. Bank of America said it generated earnings of $3.5 billion, or $0.37 per share, beating out analysts’ estimates for $0.27 per share. And Johnson & Johnson said this morning that second quarter profit slid 35% from a year prior to $3.63 billion, or $1.36 per share. “Our second quarter results reflect the impact of COVID-19 and the enduring strength of our Pharmaceutical business, where we saw continued growth even in this environment,” J&J CEO Alex Gorsky said in a press release. “Thanks to the tireless work of our colleagues around the world and our broad range of capabilities, we continue to successfully navigate the external landscape, and we remain focused on advancing the development of a vaccine to help address this pandemic and save lives.”
And Tesla shares are down more than -3% this morning after reports that its vehicle registrations in California were cut nearly in half during the second quarter. Cross-Sell, a marketing research firm that publishes automobile title and research data that captures about 65% of the U.S. market, released information late Wednesday on Tesla’s vehicle registrations that showed Tesla registered fewer than 10,000 vehicles in California in the last quarter as the coronavirus pandemic forced the closure of Tesla’s California factory and dampened demand. Cross-Sell’s report showed Tesla registrations in California—a bellwether market for the electric car maker—plummeted nearly 48% from a year before to 9,774 vehicles in the quarter, with Model 3, Tesla’s mass-market vehicle, registrations in the state falling 63.3% to 5,951.
Stocks We’re Watching
ESSA Pharma (NASDAQ: EPIX): ESSA Pharma shares gained as much as 21% yesterday after the clinical-stage biopharma stock announced that it had dosed the first patient in its Phase 1 clinical trial of EPI-7386, a therapy to treat metastatic castration-resistant prostate cancer (“mCRPC”) in patients who failed standard of care treatments, including second generation anti-androgens. “The initiation of this study represents a significant milestone for ESSA as it brings us a step closer to offering a potentially meaningful new therapeutic option to prostate cancer patients,” said Dr. David Parkinson MD, Chief Executive Officer of ESSA. “The fact that EPI-7386 was first synthesized less than two years ago and yesterday began dosing in patients is a testament to the efficiency of our team and our collaborators”. Dr. Parkinson continued, “The results from this trial will guide our future development plans and confirm the potential contribution of N-terminal domain AR inhibition to the treatment of prostate cancer.”