Plus, weekly jobless claims fell to their lowest level since March, Moderna has officially enrolled 30,000 participants in its late-stage COVID-19 vaccine trial, and Tesla delivered an earnings beat.
Stocks were lower to start Thursday with the Dow slipping 100 points, or 0.3%, lower. The S&P 500 also pulled back 0.3%, while the Nasdaq dropped 0.6%.
Weekly jobless claims dropped to their lowest level since March, with the Labor Department reporting initial claims for the week ended October 17 totaling 787,000. Economists had expected a reading of 875,000. Continuing claims, which are on a one-week lag from the headline number, fell by 1.02 million to 8.37 million. One reason for the decline in claims has been the falling off of workers who have exhausted the regular benefits and moved on to the Pandemic Unemployment Assistance emergency compensation program, which saw its total increase by 509,828 for the week ending October 3 to 3.3 million. “We’re happy to see continuing claims fall, but the decline—even allowing for the PEUC/extended benefits effect—does not map one-to-one onto rising payrolls,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Some people no longer claiming benefits may have dropped out of the labor force, while some might have taken non-payroll gig or freelance jobs. Moreover, continuing claims lag initial claims, so if initial claims start rising again, continuing claims will follow.”
Still talking. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are expected to pick up stimulus discussions again today with time running out to pass a deal before Election Day. “We’ve made progress in this regard. But we’re still not there – but we can be,” Pelosi said this morning, adding that the two sides will be “pretty soon ready to put pen to paper” for text for a bill. Even with optimism from Pelosi, President Donald Trump sought to blame Democrats for any failure on the stimulus front in a tweet late Wednesday afternoon. Still, Senate Republicans remain the ultimate roadblock to passing the stimulus bill being negotiated between Pelosi and Mnuchin. Senate Majority Leader Mitch McConnell has made no promises on when the Senate might vote on a bill, while some senior GOP lawmakers expressed skepticism on whether the chamber would take up the stimulus bill even after the election.
Moderna shares are up more than 3% this morning after the biotech said that it has completed enrollment of 30,000 participants for its final-stage COVID-19 vaccine trial, with 25,000 participants already having received their second dose. Moderna has said it could get an initial readout on whether its vaccine is effective by late November. In other vaccine news, a patient who participated in AstraZeneca’s COVID-19 vaccine trial who died in Brazil reportedly had not received the company’s shot, according to people familiar with the matter. Brazil’s health authority Anvisa said that it had been informed on Monday of the study volunteer’s death and had received a partial report from an international committee assessing the trial’s safety, which suggested the trial should continue. AstraZeneca’s trial of its vaccine, which is being developed in partnership with Oxford University, in the U.S. has been on hold for more than a month after a participant became ill last month.
On the earnings front, Tesla shares are up after the electric car company reported a beat. Tesla posted third quarter adjusted earnings per share of $0.76 on revenue of $8.77 billion, compared to analysts’ expectations for earnings per share of $0.57 on revenue of $8.36 billion. The company also reported 139,300 vehicle deliveries in the quarter, marking a new record for Tesla. New Street Research analyst Pierre Ferragu wrote after earnings report that Tesla looks “all set for a monster 2021.” Ferragu, who has a Buy rating on the stock and a $578 price target, said he believes Tesla can deliver 850,000 to 1 million vehicles in 2021. And Align Technologies shares are up more than 30% this morning after the maker of Invisalign clear tooth aligners reported earnings that blew past expectations. Align reported earnings per share of $2.25, compared to estimates for $0.64, with revenue surging 21% year-over-year to a record high of $734 million. “In our new normal, there are far fewer trips abroad, fewer flights, less money spent on gas, dry cleaning, et cetera,” Joseph Hogan, CEO of Align, said on a call with analysts Wednesday. “More people can afford to allocate that spending to Invisalign treatment, especially when they’re working remotely and critiquing themselves on camera so much of the time.”
In not-so-positive earnings news, Southwest Airlines reported its biggest loss ever as the coronavirus pandemic crushed the summer travel season. Southwest reported a loss of $1.99 per share on revenue of $1.79 billion, a 68% drop year-over-year. While the carrier said bookings have improved in recent months, it also warned that a recovery is still a ways off. “We are encouraged by modest improvements in leisure passenger traffic trends since the slowdown in demand experienced in July,” said CEO Gary Kelly in an earnings release. “However, until we have widely-available vaccines and achieve herd immunity, we expect passenger traffic and booking trends to remain fragile.” American Airlines reported this morning that its revenue dropped 73% in the third quarter to $3.17 billion, with the carrier swinging to a net loss of $2.4 billion.
Stocks We’re Watching
Astrotech (NASDAQ: ASTC): Astrotech shares skyrocketed 263% yesterday after the company said its BreathTech Corp subsidiary has partnered with the Cleveland Clinic to develop a rapid beach test for COVID-19. “We are pleased to announce that we have entered into this partnership with a highly experienced respiratory disease detection group,” said Thomas B. Pickens III, CEO and CTO of BreathTech, adding that Raed Dweik, M.D., Chairman of Cleveland Clinic’s Respiratory Institute, who will lead the Cleveland Clinic team has “successfully led many clinical trials applying mass-spec to identify unique metabolites using the breath. Over the past months, both teams have evaluated and explored a framework to collaborate in the development of the BreathTech technology at Cleveland Clinic and believe that our mass-spec technology has potential to play an important role in providing a quick, non-invasive, easy-to-use screening device that can be utilized in hospitals, nursing homes, schools and airports in an effort to get all of our lives back to normal again.”