Plus, the Fed wraps up its two-day meeting today, Sorrento Therapeutics has licensed a rapid coronavirus test, Boeing reported a loss in the second quarter, and L Brands announced it’s laying off 15% of its corporate workforce.
Stocks were higher to start Wednesday with the Dow adding 38 points, or 0.2%. The S&P 500 rose 0.4%, while the Nasdaq gained 0.7%.
The Federal Reserve concludes its two-day policy meeting today and is expected to leave rates unchanged to support the economy amid the ongoing coronavirus crisis. The meeting will be followed by a press conference by Fed Chairman Jerome Powell, who may provide an update on the Fed’s view on the economy and the extraordinary actions the central bank has taken thus far. “I don’t think we’re going to learn a ton at this meeting, but I think behind the scenes, it will be pretty interesting around the work they’re doing and setting up for the September meeting,” said BlackRock chief investment officer of global fixed income Rick Rieder, adding that the Fed may be considering such things as yield-curve control, providing forward guidance on inflation and interest rates, and more asset purchases. “I don’t think we’re going to learn specifically about any of that,” Rieder said. “I think the press conference will be interesting. I think they are going to continue to err on the side of doing more rather than doing less. They are going to continue to emphasize the uncertainty.”
As coronavirus deaths near 150,000 in the U.S., Sorrento Therapeutics said today that it has licensed a COVID-19 test from Columbia University that can provide highly accurate sestuls in thirty minutes using only a patient’s saliva. Sorrento will gather samples to validate the test in the coming weeks before submitting it to the FDA for an emergency use authorization. And the company said that, once approved, the test will be priced inexpensively. “It’s going to be equivalent to one, two, three, four cups of coffee, not much more than that,” said Mark Brunswick, Sorrento’s senior vice president and head of regulatory affairs and quality. “Something that people would be amenable to having done to them more than once a week.” On the stimulus front, as Republicans and Democrats continue to negotiate a deal on the next relief package, Senator Rob Portman, R-OH, urged Congress to come to an agreement on the federal unemployment insurance supplement by the end of this week. “If we do nothing because we end up in a partisan gridlock here and both sides go to their corners, the people who get hurt are the workers because the $600 will end,” Portman said. “There’s a cliff, and we can’t let that happen so we need to do something before Friday.”
Earnings: The Bad. Boeing shares are down around -4% this morning after the airplane maker posted a loss of $4.79 per share on revenue of $11.8 billion in its second quarter, compared to estimates for a loss of $2.54 on revenue of $13.76 billion. “Regretfully, the prolonged impact of COVID-19 causing further reductions in our production rates and lower demand for commercial services means we’ll have to further assess the size of our workforce,” said Boeing CEO Dave Calhoun in a staff note after the company released a $2.4 billion quarterly loss. “This is difficult news, and I know it adds uncertainty during an already challenging time. We will try to limit the impact on our people as much as possible going forward.” GM said it lost $806 million and burned through billions of dollars in the second quarter, alongside a 34% drop in U.S. vehicle sales “due to the COVID-19 pandemic and tight dealer inventories caused by the production shutdown in the first and second quarters.” And Spotify shares are down -2% after the streaming radio company posted a revenue miss, even as paid subscribers rose to 138 million, as the coronavirus led to a decline in advertising and as customers switched to lower price tiers. “User trends remain strong on a headline number basis, but mix shift to lower price tiers and geographies continues to weigh on subscription average revenue per user, leaving subscription revenues below where some investors had hoped,” said Evercore ISI analyst Kevin Rippey.
Earnings: The Good. Shopify shares are up nearly 10% today after the e-commerce platform said second quarter revenue rose 97% year-over-year to $714.3 million, beating expectations for revenue of $513.83 million. “The strength of Shopify’s value proposition was on full display in our second quarter,” Shopify Chief Financial Officer Amy Shapero said in a release on Wednesday. “We are committed to transferring the benefits of scale to our merchants, helping them sell more and sell more efficiently, which is especially critical in this rapidly changing environment.” And FireEye shares are up more than 18% after posting better-than-expected results, with revenue up 6% year-over-year to $230 million. “The steps we have taken to accelerate our transformation to a security-as-a-service company resulted in record second quarter revenue and our highest ever non-GAAP profitability,” said FireEye CEO Kevin Mandia in a statement. “Growing adoption of our validation platform, cloud-based security products and intelligence solutions, combined with improved net retention in our appliance-based security controls business, drove annualized recurring revenue to record levels.”
And L Brands shares have skyrocketed more than 35% this morning after the Victoria’s Secret and Bath & Body Works parent said it is preparing to cut 15% of its corporate workforce, or around 850 jobs. The company said the move will help it to save roughly $400 million annually, and about $175 million in savings in fiscal 2020. “Decisions relating to our workforce are incredibly difficult and not taken lightly, but these actions are necessary to best position our company for the long-term,” L Brands CEO Andrew Meslow said in a statement, adding that the company is working toward improving the struggling profitability of Victoria’s Secret. L Brands also said it expects second quarter net sales to come in around 20% lower than a year ago, despite a roughly 10% increase in sales at Bath & Body Works in the quarter.
Stocks We’re Watching
Blink Charging Co. (NASDAQ: BLNKW): Blink Charging shares are up 25% at the time of writing after the electric vehicle charging infrastructure company announced a new deal to develop high-power wireless and enhanced DC fast charging (DCFC) systems with integrated battery storage for the transportation market with EnerSys. “This is an exciting collaboration with EnerSys because it combines the industry-leading technologies of our two companies to provide user-friendly, high powered, next-generation charging alternatives,” said Michael D. Farkas, Founder, CEO, and Executive Chairman of Blink, in a statement. “We are continuously innovating our product offerings to provide more efficient and convenient charging options to the growing community of EV drivers. Blink’s patent-pending inductive parking bumper technology under development will enable EV owners to charge their vehicles without physically interacting with a charging station while providing a faster and more effortless charging experience. Likewise, by developing charging stations with next-generation integrated DCFC with energy storage capabilities, we can make state-of-the-art charging technology more affordable and accessible to the EV industry.”