Plus, President Trump called off stimulus negotiations, Eli Lilly submitted a request to the FDA for emergency use authorization for its experimental COVID-19 antibody treatment, and GE got a Wells notice from the SEC.
Stocks were higher to start Wednesday with the Dow adding 356 points, or 1.3%. The S&P 500 gained 1.3%, while the Nasdaq traded 1.4% higher.
Mixed signals. President Donald Trump ended stimulus talks with Democratic leaders late yesterday afternoon, just hours after Federal Reserve Chairman Jerome Powell issued his strongest call yet for greater spending to avoid damaging the economic recovery. “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” Trump tweeted. Cleveland Federal Reserve President Loretta Mester said not passing stimulus soon will mean the economic recovery in the U.S. is “going to be a much slower recovery and it’s disappointing,” while Minneapolis Fed President Neel Kashkari warned that “there are enormous consequences if we just let things go, and the downturn will end up being much worse.” Then, in a subsequent tweet storm, Trump called for billions more in federal support for airline payrolls and the Paycheck Protection Program, as well as a standalone bill for another round of $1,200 stimulus checks. “Assuming that Trump doesn’t flip-flop on his stance on the fiscal stimulus package, we think remnant hopes of reviving the risk-on, reflation trade may be put to rest for now,” said Terence Wu, a currency strategist in Singapore at Overseas-Chinese Banking Corp., adding that investors should “stay humble on shifting political winds.”
A House panel proposed a series of far-reaching antitrust reforms to curb the power of U.S. technology giants Apple, Amazon, Google-parent Alphabet, and Facebook, following a 16-month investigation into competitive practices. The nearly 450-page report said the four businesses enjoy monopoly power and suggested that Congress needs to take up changes to antitrust laws that could result in parts of their businesses being separated. “Companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons,” said the panel’s Democratic leaders. “These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement. Our economy and democracy are at stake.”
Eli Lilly shares are up more than 3% this morning after the drugmaker submitted a request to the FDA for emergency use of its experimental COVID-19 antibody treatment. Eli Lilly said an interim analysis of its BLAZE-1 clinical trial showed the antibody drug reduced the rate of hospitalizations for coronavirus patients, and that it would seek the FDA’s approval for emergency use of the combination therapy in November once additional safety data is available and enough doses have been made. “We believe the data generated to date provide sufficient evidence that both mono therapy and combination therapy may be effective to treat COVID-19 in patients with a high risk for serious outcomes,” said Daniel Skovronsky, Lilly’s chief scientific officer and president of Lilly Research Laboratories. “Lilly is diligently working with regulators around the world to make these treatments available.”
General Electric warned yesterday that it is likely to face SEC allegations of wrongdoing tied to a previously disclosed accounting probe. GE received a Wells notice on September 30 advising that the SEC may pursue a civil enforcement action over possible securities violations tied to an old insurance business, while the SEC has yet to decide whether it will recommend action on issues related to the company’s power equipment business which is also under investigation. “GE has fully cooperated with the SEC’s investigation related to past reserve practices at our run-off insurance subsidiary, as we have disclosed since 2018,” GE said. “We strongly disagree with the recommendation of the SEC staff and will provide a response through the Wells notice process.”
And Levi Strauss shares are up nearly 7% at the time of writing after the denim maker reported online sales growth of 52% in its fiscal third quarter, even as sales in the quarter fell 27% and net income tumbled 78%. Levis reported earnings per share of $0.08 on revenue of $1.06 billion, compared to expectations for a loss of $0.22 per share on revenue of $822.2 million. CEO Chip Bergh said recent investments in building out Levi’s direct-to-consumer business led to better-than-expected results in the quarter. “This quarter was such better than we expected, and it’s a little bit of an out-of-body experience for me to say that when revenues are down 27%… but we were profitable,” Bergh said. “All of the actions that we took, the tough choices that we had to make very early in the pandemic, are really starting to pay off.”
Stocks We’re Watching
Kiniksa Pharmaceuticals (NASDAQ: KNSA): Kiniksa Pharmaceuticals shares gained as much as 25% yesterday after the biopharma company announced positive data from its global Phase 2 trial of mavrilimumab in giant cell arteritis (GCA). “We are thrilled to report that both the primary and secondary efficacy endpoints in the Phase 2 trial of mavrilimumab in giant cell arteritis achieved statistical significance,” said Sanj K. Patel, Chief Executive Officer and Chairman of the Board of Kiniksa. “These data suggest mavrilimumab may offer a treatment option for patients suffering from giant cell arteritis and further demonstrate the potential broad utility of mavrilimumab. We look forward to presenting additional data from this study in a publication or at a future medical conference.”