Plus, new weekly jobless claims totaled 881,000, Pfizer said it could have results from its Phase 3 coronavirus vaccine trial as early as October, and Tesla has fallen to near bear market territory.
Stocks were lower to start Thursday with the Dow dropping 800 points, or more than 2%. The S&P 500 slipped 3.3%, while the Nasdaq traded 4.8% lower.
New weekly jobless claims totaled 881,000 last week, better than the 950,000 expected by economists. The number reflects an improving labor market as well as an adjustment in methodology from the Labor Department to address seasonal factors. Continuing claims fell to 13.254 million. Jefferies chief U.S. financial economist Aneta Markowska said the decline in seasonally adjusted claims “is more of a reflection of what was really happening” with unadjusted claims in recent weeks, and this week’s report is “just really more of a catch-up to reality.” Still, “In short, the pace of layoffs still remains very high, and it appears that the proportion of newly laid-off people quickly finding another job is falling,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Its very difficult to make any hard conclusions about what one particular week’s worth of data means,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc, adding that in the grand scheme of things, there’s “still quite a huge amount of people out there that are receiving benefits.”
As job losses remain elevated, the impasse over the next round of stimulus looks set to continue between Democrats and Republicans. Senate Minority Leader Chuck Schumer said the skinny coronavirus relief bill being prepared by Senate Republicans doesn’t go far enough to mitigate damage from the outbreak. “Republicans may call their proposal ‘skinny,’ but it would be more appropriate to call it ‘emaciated.’ Their proposal appears to be completely inadequate and, by every measure, fails to meet the needs of the American people,” Schumer wrote in a letter to Senate Democrats. “With no money for rental assistance, no money for nutrition assistance, and no money for state and local services, the census, or safe elections, [Majority] Leader [Mitch] McConnell and Senate Republicans would be making another unacceptable and ineffective attempt at providing relief.”
On the vaccine front, Pfizer CEO Albert Bourla said the company could have the results from its late-stage coronavirus vaccine trial as early as October. Pfizer has already enrolled 23,000 volunteers to its phase three trial that began in late July. “We expect by the end of October, we should have enough… to say whether the product works or not,” Bourla said. The New England Journal of Medicine published positive data on the first human trial of Novavax’s COVID-19 vaccine late yesterday. “Taken together, ur findings indicate that the adjuvanted, recombinant, full-length spike protein nanoparticle vaccine NVX-CoV2373 is a promising candidate that warrants testing in efficacy studies,” the Journal said. And as the first generation of COVID-19 vaccines move into large-scale Phase 3 trials, the slower but much-watched vaccine effort from GlaxoSmithKline and Sanofi is entering a 440-patient Phase 1/2 clinical trial in the U.S., the companies said this morning. The companies said they could have results in early December and aim to start a Phase 3 trial before the end of the year, with hopes to seek regulatory approval for the vaccine in the first half of next year.
Tesla shares have fallen into correction territory, dropping more than 17% since Monday’s high, following the electric vehicle maker saying on Tuesday that it would raise up to $5 billion in a new stock offering and after the company’s largest outside shareholder reduced its position. Yesterday, Baillie Gifford, Tesla’s largest outside shareholder said it had reduced tis position in the company from around 6.3% to less than 5% due to portfolio restrictions. “After an absolutely insane move where its stock rallied more than 75% on nothing really more than news of a stock split, shares of Tesla are in the middle of a hangover as the stock is on pace for its third straight daily decline of roughly 5%,” Bespoke Investment Group said in a note to clients this morning.
And shares of JPMorgan and Bank of America are higher this morning after Deutsche Bank upgraded both, saying bank stock performance is about to get better after lagging amid pandemic-induced revenue concerns due to low interest rates and weak loan growth, along with credit concerns. “At this point, a further meaningful lag seems unlikely and there’s an argument to be made that bank stocks should catch up a bit versus the broader market,” said Deutsche Bank analyst Matt O’Connor in a note, raising both stocks from Hold to Buy. O’Connor said his positive view on bank stocks also “reflects more confidence in a continued macro recovery,” and added that there’s a “good chance” the bulk of banks’ loan loss reserve building is done, and noted capital markets and mortgage revenue are both strong, while fees from service charges, card income, and investment and brokerage continue to stage a rebound.
Stocks We’re Watching
Kansas City Southern (NYSE: KSU): Kansas City Southern shares jumped yesterday following reports that a group of buyout investors have made a takeover offer for the railroad operator, which has a current market value of more than $18 billion. Blackstone Group Inc and Global Infrastructure Partners submitted the bid after a previous approach was rejected, according to a report from The Wall Street Journal. Kansas City Southern is reportedly working with Morgan Stanley to consider the bid.