Plus, coronavirus cases in the U.S. rose to 4 million, Senate Republicans have come to agreement with the White House on how to proceed with a new coronavirus relief bill, Tesla smashed earnings estimates, and another retailer declared bankruptcy.
Stocks were lower to start Thursday with the Dow dropping 167 points, or 0.6%. The S&P 500 slid 0.4%, and the Nasdaq traded 0.5% lower.
Jobless claims came in above 1 million for the 18th straight week. The Labor Department reported a reading of more than 1.42 million for the week ending July 18, marking the first time since March jobless claims have risen since the week prior. Initial claims rose as coronavirus cases surge across the country, forcing businesses to again close their doors. “The surge of COVID cases in the Sun Belt and the stalling out of reopening activities in other states has seemingly caused another round of layoffs that has stymied the nascent labor market recovery,” said Thomas Simons, money market economist at Jefferies. The rise in initial jobless claims comes as the additional $600-per-week unemployment benefit keeping millions of Americans afloat is set to expire at the end of next week.
Confirmed coronavirus cases in the U.S. have risen to 4 million, with more than 2,600 new cases reported every hour on average, as daily new COVID-19 deaths hit new records in Florida, Idaho, Texas, and elsewhere. According to Reuters, it took the country 98 days to reach 1 million cases, another 43 days to reach 2 million, then 27 days to reach 3 million, and only 16 days to reach 4 million. Morgan Stanley biotech analyst Matthew Harrison said in a note today that coronavirus cases could rise to as high as 150,0000 per day in the U.S. “We update our scenarios to account for the higher sustained infection rate,” Harrison wrote. “Our bull [most optimistic] case reflects similar virus control to Europe while our base [most likely] case assumes a near-term plateau followed by increased spread in the fall. 150,000 daily new cases are possible without better control of the virus.”
As jobless claims rise and coronavirus cases surge, Senate Republicans have “reached a fundamental agreement” with the White House on how to proceed with a new coronavirus relief bill. Senate Majority Leader Mitch McConnell has said he wants to keep the price tag of a new bill under $1 trillion, and the new proposal will serve as a starting point for negotiations with Democrats, who passed a $3.4 trillion bill in the House in May and have been pressuring the GOP to move rapidly on new aid as coronavirus cases surge and with previous relief measures set to expire at the end of the month. Republicans are dropping President Trump’s insistence on a payroll tax cut in favor of another round of direct payments to Americans that could be delivered in August, their relief plan will also extends enhanced unemployment insurance “based on approximately 70% wage replacement,” according to Treasury Secretary Steven Mnuchin.
In earnings news, Tesla smashed estimates reporting adjusted earnings per share of $2.18, compared to expectations for earnings per share near the break-even line. According to Wedbush’s Dan Ives, it was a “home-run quarter” as the company reinstate its original delivery target of 500,000 units in fiscal 2020. Microsoft reported slowing sales in its cloud computing business, with revenue rising 47% in the quarter ended June 30, missing predictions for a 49% gain and far lower than the 59% rise in the prior quarter. “Some of the bulls were hoping for more of a beat,” Ives said. Twitter reported second quarter earnings that missed analyst expectations, reporting a loss per share of $1.39 on revenue of $683 million, compared to estimates for revenue of $707 million. However, Twitter reported that its daily active users were 186 million, beating estimates for 172.8 million. And Southwest Airlines said today that it lost $915 million in the second quarter, and warned that travel demand will likely remain depressed until there’s a vaccine or treatment for COVID-19. The carrier’s revenue dropped nearly 83% to a little over $1 billion from $5.9 billion last year.
And Ascena Retail Group shares are down -23% this morning after the Ann Taylor and Lane Bryant parent became the latest retailer to declare bankruptcy. In its press release announcing its filing for Chapter 11, Ascena said that its restructuring agreement is supported by more than 68% of its secured term lenders, and that it plans to close a number of stores and sell the rights to one of its brands. “The meaningful progress we have made driving sustainable growth, improving our operating margins and strengthening our financial foundation has been severely disrupted by the COVID-19 pandemic,” said interim Executive Chair Carrie Teffner in a statement.
Stocks We’re Watching
Blink Charging (NASDAQ: BLNKW): Blink Charging shares gained as much as 42% yesterday after the electric vehicle charging equipment operator announced a new grant from Virginia Clean Cities for 200 Blink Fast Level 2 – 19.2 kW charging stations across the mid-atlantic region, including locations in Virginia, Maryland, West Virginia and Washington, DC. “This is an exciting progress in making EV charging more accessible and timely in our region. As more and more consumers, fleet operators, and transportation network drivers use electric transportation, modern equipment like these 200 19.2 kW Blink chargers are going to change the game in the region” said Alleyn Harned, Executive Director of Virginia Clean Cities. “19.2 kW chargers are five times faster than the first generation 3.6 kW Level 2 EV chargers, and 24 times faster than trickle charging, meaning more cars can be charged in a day at appropriate facilities.”