Plus, the FDA officially approved Gilead’s remdesivir for treating hospitalized coronavirus patients, Intel share are down after reporting mixed earnings results, and things are looking like 2018 for bitcoin.
Stocks were mixed to start Friday with the Dow slipping 10 points, or less than 0.1%, lower. The S&P 500 hovered just above the flatline, while the Nasdaq fell 0.4%.
As stimulus negotiations drag on and the election rapidly approaching, the chance of getting a deal passed by Congress before November 3 is feeling increasingly out of reach. House Speaker Nancy Pelosi said yesterday that she and Treasury Secretary Steven Mnuchin were “just about there” on resolving a key piece of a stimulus package, even as significant differences remain. However, Pelosi later tempered optimism saying it could take “a while” for a bill to be written and signed. But putting off votes on a stimulus package until after the election risks the Trump administration being less inclined—or able—to push a package through the GOP-led Senate, which could mean a bill won’t be passed until late January at the earliest. “The prospect of waiting until January or February looks like an eternity if you can’t feed your family for a week now,” Diane Swonk, chief economist at Grant Thorton, wrote in a note to clients.
With stimulus looking unlikely in the near term, the U.S. reported more than 71,600 new coronavirus cases Thursday, approaching a record number of daily infections set in late July as the outbreak spreads in the Midwest and West and hospitalizations rise. “Unfortunately, we are seeing a distressing trend here in the United States,” said Jay Butler, the CDC’s deputy director for infectious diseases. Butler said the surge in cases is likely due to the arrival of cooler temperatures, adding that “smaller, more intimate gatherings of family, friends and neighbors may be driving transmission as well, especially as they move indoors.” Dr. Robert Redfield, director of the CDC, said this week, “The pandemic is not over. Here in the United States, we’re approaching a critical phase.”
But it’s not all bad news on the coronavirus front. Gilead shares are up this morning following the FDA approving its antiviral drug remdesivir as a treatment for the coronavirus. The FDA granted the drug emergency use authorization back in May, allowing hospitals and doctors to use it on patients hospitalized with COVID-19 even though it had not been formally approved by the agency. The drug has helped shorten the recovery time for some hospitalized patients, and has been approved for use in COVID-19 patients who are at least 12 years old and require hospitalization, according to the company. The FDA’s approval makes remdesivir the first and only fully approved treatment for the coronavirus in the U.S., where there are more than 8.4 million confirmed cases of the virus, and more than 223,000 deaths.
Intel shares are down more than 10% this morning following the release of mixed quarterly results. Earnings per share were in line with analyst estimates at $1.11, while revenue was higher than expected at $18.33 billion. However, Intel’s Data Center Group posted a 7% decline in revenue to $5.91 billion. Intel said revenue from enterprises and governments went down 47% after two quarters of growth above 30% due to the coronavirus pandemic. Intel also reaffirmed the delay of its latest generation chips, prompting Bank of America to downgrade the stock to underperform. The delay for its 7 nanometer processors pushes their release to 2022 for computers, and 2023 for servers. “The result could be years of uncertainty, with customers at a minimum moving more share to AMD for risk mitigation, and increasingly for a more compelling price/performance/feature list,” Bank of American analysts said in a note.
And things are looking like 2018 again, at least for bitcoin. Prices of the largest digital currency have risen to highs not seen in more than two years this week following PayPal’s announcement that it would be launching a cryptocurrency service. Up nearly 23% month-to-date, bitcoin also got accolades from legendary hedge fund manager Paul Tudor Jones this week who said that the digital gold is in its “first inning” and would likely be “the best inflation trade” in a time of widespread quantitative easing. “The reason I recommended bitcoin is because it was one of the menu of inflation trades, like gold, like TIPS breakevens, like copper, like being long yield curve and I came to the conclusion that bitcoin was going to be the best inflation trade,” Jones said to CNBC this week. “Bitcoin has this enormous contingence of really, really smart and sophisticated people who believe in it. It’s like investing with Steve Jobs and Apple or investing in Google early.”
Stocks We’re Watching
Gap, Inc. (NYSE: GPS): Gap shares are up more than 13% since Wednesday after the company unveiled plans to shrink its brick-and-mortar store footprint by about 350 points and switch its business model to be more driven by e-commerce and off-mall locations. The retailer, which owns Gap, Old Navy, Banana Republic, and Athleta, said it expects to close roughly 30% of Gap and Banana Republic stores in North America by the end of 2023, by which time it plans to bring in 80% of revenue fro e-commerce and off-mall locations. “We’ve been overly reliant on low-productivity, high-rent stores,” said Mark Breitbard, CEO of the Gap brand. “We’ve used the past six months to address the real estate issues and accelerate our shift to a true omni-model.”