Plus, weekly jobless claims were higher than expected, AstraZeneca said it still expects to know whether its coronavirus vaccine will be safe and effective before the end of this year, and LVMH is suing Tiffany.
Stocks were higher to start Thursday with the Dow adding 200 points, or 0.7%, before reversing course. The S&P 500 gained 0.6%, while the Nasdaq advanced 1%.
Weekly jobless claims were worse than expected, coming in at 884,000 versus 850,000 expected by economists. The total was unchanged from the week prior. Continuing claims rose from the previous week, hitting 13.385 million, indicating that the strong jobs improvement through the summer may be leveling off heading into fall. “It is especially concerning that the pace of layoffs has not slowed more materially even though the economy has reopened more fully, and more and more businesses have come back online,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, in a note. “The risk now comes from another round of virus outbreaks in coming weeks. The labor market remains at risk of permanent damage which will prolong the path back to pre-pandemic levels.”
AstraZeneca said that it should still know before the end of the year whether its experimental coronavirus vaccine will be safe and effective, assuming it can resume its late-stage trial soon. “What we have here is a special set of circumstances where the whole world becomes involved in the conduct of a clinical trial,” said AstraZeneca CEO Pascal Soriot in his first public comments since the trial was halted earlier this week. The decision on whether to resume the study is in the hands of a group of independent experts working to understand whether a patient’s illness was a coincidence or a result of the vaccine. “The reality is we all have to be very patient and see how it unfolds.” “However long it takes, it is going to introduce some delay in that program,” said Richard Hatchett, head of the Coalition for Epidemic Preparedness Innovations. “Whether that delay is just a week or whether it’s several weeks, or even several months, remains to be seen. It points to the fact that vaccine development is tricky and unpredictable, and that things that look like they are going along very well can encounter difficulties.”
Citigroup said CEO Michael Corbat is retiring in February 2021 after eight years leading the bank. Retail banking chief Jane Fraser will succeed him, making her the first female CEO of a major U.S. bank. “We have completed our transformation from the financial crisis and emerged a simpler, safer and stronger institution. There is always more to do and I believe the time is right for my successor to lead Citi through this next stage of progress. I have worked with Jane for many years and am proud to have her succeed me,” Corbat said in a statement. “With her leadership, experience and values, I know she will make an outstanding CEO.” Fraser, who has been with Citigroup since 2004 after a decade as a McKinsey & Co consultant, said in a statement, “The way our team has come together during this pandemic shows what Citi is made of. I am excited to join with my colleagues in writing the next chapter.”
LVMH said today that it intends to file a lawsuit against Tiffany, accusing the luxury jeweler of “dishonesty” and mismanaging the coronavirus crisis. The announcement comes a day after LVMH said it would be scrapping its $16.2 billion acquisition of Tiffany, and Tiffany filed a suit in Delaware against LVMH to enforce the agreement. “LVMH will defend itself vigorously,” the luxury goods conglomerate said. “The long preparation of this assignment demonstrates the dishonesty of Tiffany in its relations with LVMH. This action is essentially based on the accusation by Tiffany that LVMH failed to take the reasonably necessary steps to obtain the various regulatory authorities’ approvals in a timely way.”
And Restoration Hardware shares are up nearly 23% this morning after the high-end furniture company delivered an earnings beat. Restoration Hardware reported earnings of $4.90 per share on revenue of $709.7 million, and said that its free cash flow doubled in its most recent quarter. Following the report, Telsey Advisory Group analyst Cristina Fernandez upgraded RH shares to Outperform and boosted her price target on the stock from $345 to $450 – 14% higher than the current price. Fernandez highlighted the better-than-expected demand that RH is seeing, evidence that “the high income consumer is healthy and is investing in their homes,” and the company’s higher margins, which reflect the fact that “RH has elevated its product offering and pricing.”
Stocks We’re Watching
Trillium Therapeutics (NASDAQ: TRIL): Trillium Therapeutics shares are up more than 48% over the last two days after reporting positive data from its ongoing TTI-622 and TTI-621 dose escalation studies and subsequent $25 million investment from Pfizer. “We are exceedingly encouraged by the evolving profile of TTI-622, our SIRPa-IgG4 Fc fusion protein, as demonstrated in the ongoing dose escalation study in relapsed and refractory lymphomas,” said Jan Skvarka, Trillium’s President and Chief Executive Officer. “TTI-622 is showing substantial monotherapy activity in highly pre-treated patients, with a broad therapeutic window, a rapid onset of action, and across a range of lymphoma indications. With no significant safety signals observed, we are further escalating the dose. TTI-621, our SIRPa-IgG1 Fc fusion protein, is showing a strong safety profile, and we have not observed any dose limiting thrombocytopenia for doses up to 1.4 mg/kg. We continue to see a monotherapy activity signal, and are further dose escalating to characterize clinical activity at higher doses. We expect to declare maximum tolerated doses or recommended phase 2 doses for both molecules either towards the end of this year or in the first half of 2021. Abstracts for both trials have been submitted to the American Society of Hematology annual meeting, and we look forward to presenting further details and additional data in December.”