Plus, weekly jobless claims rose higher for the second week in a row, Gap shares are down on disappointing earnings results, while Nordstrom shares are up following its earnings beat.
Stocks were lower to start Wednesday with the Dow dropping 185 points, or 0.6%. The S&P 500 slid 0.4%, while the Nasdaq traded just below the flatline.
Weekly jobless claims ticked higher, marking the first back-to-back increase in claims since July. The Labor Department reported initial jobless claims of 778,000 for the week ended November 21, 30,000 higher than the week prior. Continuing claims fell by 299,000 to 6.07 million in the week ended November 14, however the number of Americans on an extended assistance program continued to rise as more people exhausted regular state benefits. “The continued weakness of the labor market is something that is going to drive the whole economy down,” said Catherine Mann, global chief economist at Citigroup, adding that strong sectors like manufacturing are “going to keep us from being in official recession, but it’s going to be very grim.”
As daily new coronavirus cases in the U.S. continue to rise ahead of the holiday, epidemiologists and public health officials are warning that Thanksgiving will exacerbate an already severe nationwide outbreak. Despite pleas from health officials to stay home for the holiday, roughly 1 million Americans boarded plans this past weekend, with videos and images of packed travel hubs from around the nation. Dr. Megan Ranney, an emergency physician and director of the Brown Lifespan Center for Digital Health, said she is “pretty darn scared of Thanksgiving this year. I’m not scared for the day itself, but for what’s going to happen, two, three, and four weeks later. You can’t get a higher risk activity than sitting around a table unmasked indoors for hours, so we’re just risking seeding hundreds of thousands, if not millions of new infections, which will then, of course, lead to hospitalizations and deaths.” Ranney added that Thanksgiving dinners could be “super spreader events.” “If we’re not careful during Thanksgiving,” Ranney warned, “we’re going to take what is already gong to be a really, really difficult December and make it two or three or four times worse.”
Gap shares are down nearly 19% this morning after the company reported a fiscal third quarter earnings miss as higher spending on marketing offset strong sales at Old Navy and Athleta. Gap reported earnings per share of $0.25 on revenue of $3.99 billion, compared to estimates for earnings per share of $0.32 on revenue of $3.82 billion. “Gap’s boring and mundane offer provides so little in the way of excitement that it is very easy for consumers to overlook,” said GlobalData Retail Managing Director Neil Saunders. “The problems of a dull brand images, a lack of clarity about who the customer is, and a constant cycle of discounting all remain fundamental issues that need to be resolved sooner rather than later.”
In positive earnings news, Nordstrom shares are up more than 17% today after it posted better than expected third quarter results. The department store retailer reported earnings per share of $0.34, versus a loss of $0.06 per share expected, on revenue of $3.09 billion. Nordstrom CEO Erik Nordstrom said the company is “continuing to amplify categories that are relevant with customers during the pandemic, such as activewear and wellness products.” Nordstrom added that the company is looking toward the future when a COVID-19 vaccine is available, and anticipates “pent-up customer demand, particularly around occasions like travel or in-person social events.”
And for a bit of breaking news, Slack shares are up more than 29% this morning following a report from the Wall Street Journal that Salesforce has held talks to buy the workplace messaging company. Citing people familiar with the matter, the Wall Street Journal reported that any deal would likely value Slack at more tan its current market cap, which was around $17 billion prior to the report. A deal between the two is not guaranteed and talks could fall through. In other sale news, ViacomCBS said this morning that it has sold its Simon & Schuster global publishing house to Bertelsmann’s Penguin Random House for $2.18 billion. The transaction is expected to close some time next year.
Stocks We’re Watching
Nano One Materials Corp (OTC: NNOMF): Nano One shares are up more than 7% this morning following its announcement yesterday that its latest durability test results confirmed that its high-voltage cobalt-free battery is also stable at elevated operating temperatures required for automotive, power tool, and energy storage applications. “Nano One has achieved over 500 fast charge and discharge cycles at 45°C,” said Dr. Stephen Campbell, CTO of Nano One Materials Corp, “in an innovative battery design that pairs its high-voltage LNM cathode with a conventional electrolyte and a graphite anode. We have also reached 1,000 fast charge and discharge cycles at 25°C demonstrating that issues of excessive gassing, anode contamination and poor cycling may be overcome.”