Stocks Are Higher After Treasury Secretary Mnuchin Says He’s “Hopeful” Agreement Can Be Reached On New Stimulus Deal

Plus, several blue-chip companies announced tens of thousands of job cuts, Moderna and Regeneron are up on positive coronavirus drug news, and two software companies went public through direct listings this morning.

Stocks were higher to start Wednesday with the Dow adding 410 points, or 1.5%. The S&P 500 gained 1.1%, while the Nasdaq rose 1.2%.

Treasury Secretary Steven Mnuchin struck a “hopeful” tone on stimulus, Mnuchin said he will speak again with House Speaker Nancy Pelosi today regarding a possible deal, with an aim to reach “understanding” with Pelosi on a broad relief package by Thursday. “I say we’re going to give it one more serious try to get this done and I think we’re hopeful that we can get something done,” Mnuchin said. “I think there is a reasonable compromise here.” While House Democrats are preparing a vote on their new $2.2 trillion stimulus bill, Mnuchin suggested he’ll offer Democrats a proposal for roughly $1.5 trillion in pandemic relief in a counter-offer similar to a plan put forth by a bipartisan group of House members earlier this month. While Pelosi previously rejected that offer, she said she is also “hopeful” about a potential agreement. “We’ll just see what they come back with today and how our negotiations go next,” Pelosi said.

As fresh stimulus continues to languish in negotiations, tens of thousands of job cuts announced by blue-chip companies in the last 24 hours are a warning sign for the U.S. labor market. Disney announced Tuesday that it will layoff 28,000 workers across its parts, experiences, and consumer products divisions. Materials company Dow said today that it plans to reduce its global workforce costs by approximately 6%, though it didn’t specify the number of jobs that will be eliminated. Also this morning, Royal Dutch Shell said it plans to cut between 7,000 and 9,000 jobs by the end of 2022. And airlines are just hours away from eliminating 30,000 positions as billions in federal airline aid expires early Thursday. Airline executives including the CEOs of American, JetBlue, Southwest, and United have been busy making last-ditch attempts in Washington to persuade lawmakers and the Trump administration to pass more aid as the job cuts loom. “This isn’t about raising funds for the airlines,” said American Airlines CEO Doug Parker. “This is about keeping the infrastructure in place by having us be paid to pass on to our team members who we otherwise don’t have work for to keep them in place.”

Moderna and Regeneron rose to start the trading day after positive coronavirus drug news. Moderna announced that its vaccine candidate was found to be as effective in older adults as it is in younger adults, with minimal side effects, in an early trial as published by The New England Journal of Medicine. And Regeneron said its experimental two-antibody cocktail reduced viral levels and improved symptoms in non-hospitalized patients with mild-to-moderate COVID-19. In other coronavirus news, Becton Dickinson’s coronavirus test that returns results in 15 minutes has been cleared for use in countries that accept Europe’s CE marking. “It is really a game-changing introduction here in Europe,” said Fernand Goldblat, Becton Dickinson’s head of diagnostics for Europe, adding that the continent was the epicenter of the pandemic back in April and May, “and unfortunately I think we’re headed back in that direction. So the need will be extremely high.”

General Motors and Nikola are no longer expected to finalize a $2 billion deal scheduled to close before end-of-day Wednesday after allegations of fraud and sexual abuse surfaced against the embattled electric truck maker’s founder and former executive chairman, Trevor Milton. Executives from both companies are expected to extend talks, according to people familiar with the negotiations, and the deal may be terminated by either side if it isn’t closed by December 3, according to a public filing by Nikola when the partnership was announced. The fraud and sexual assault claims against Milton have raised serious concerns about the due diligence GM and others involved performed on Nikola prior to GM announcing it was taking an 11% stake in the company. 

Software makers Palantir and Asana are launching direct listings today, allowing existing shareholders to sell stock to new investors rather than raising money through a traditional share sale. Palantir’s reference price of $7.25 a share indicates a valuation of around $15.7 billion. The company provides software and data analytics services to help government agencies and large companies make sense of vast amounts of information. And Asana, which sells cloud-based software for tracking group projects, set its reference price at $21 for its direct listing, implying a valuation of about 15 times current year sales. 

Stocks We’re Watching

Sorrento Therapeutics (NASDAQ: SRNE): Sorrento Therapeutics gained 20% yesterday after the biotech released encouraging preclinical data for its experimental COVID-19 antibody therapies STI-1499 and STI-2020. “We believe that the results for STI-1499 and STI-2020 are truly remarkable. Based on the preclinical testing we have conducted to date, STI-2020 is our most promising SARS-CoV-2 antibody so far. The potency of both nAbs and their ability to mitigate SARS-CoV-2 infection from the lungs in a Syrian golden hamster model is very impressive, strongly supporting further development of these antibodies,” said Dr. Henry Ji, Chairman and CEO of Sorrento. “STI-1499 has been cleared by the FDA for a Phase 1 clinical trial in hospitalized COVID-19 patients. STI-2020 has the potential to be utilized for both early and late therapeutic interventions, as well as for prophylaxis, with the potential of having a low efficacious dose, which could enable efficient manufacturing and ultimately result in higher affordability for patients.”

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