Stocks have been lower from the open, and picked up downward momentum as the morning progressed, after the 30-year bond's yield sunk to a record low and the 10-year yield fell below the two-year for the first time in over a decade. The 10-year Treasury yield falling below the two-year yield is considered a signal of impending U.S. economic recession, which is a fear that has been building in recent weeks given the worsening trade relations between the U.S. and China as well as signs of slowing growth in other economies around the world.
ECONOMIC EVENTS: In the U.S., the July trade price report beat estimates with 0.2% month-over-month gains for both import and export prices.
TOP NEWS: Shares of Macy's (M) are tanking, down 15% near noon after the department store operator reported worse than expected quarterly profit and cut its fiscal year earnings forecast. While CEO Jeff Gennette highlighted that Macy's "delivered another quarter of comparable sales growth," he also noted that "rising inventory levels became a challenge" and the company had to take markdowns to clear excess Spring inventory.
Also lower are both CBS (CBS) and Viacom (VIAB) in a delayed, negative reaction to yesterday afternoon's confirmation of a deal to merge in an all-stock transaction. Following the deal news, Bernstein downgraded CBS to Underperform, while BMO Capital and Macquarie moved to the sidelines on CBS and Viacom, respectively. More bullish on the stocks after the deal, Bank of America Merrill Lynch analyst Jessica Ehrlich upgraded CBS to Buy and Guggenheim analyst Michael Morris raised Viacom's rating to Buy. Investors are selling shares of both this morning, sending CBS down about 6.5% and Viacom down nearly 7%.
We Company, the parent of WeWork, filed its form S-1 with the SEC related to its initial public offering of Class A common stock. The company intends to apply to list under the symbol "WE," but the filing does not yet make clear which exchange the stock will be listed on or any details about expected pricing. The filing shows that We Company's 2018 revenue was $1.82B and its net loss was $1.93B, or ($9.87) per diluted share.
MAJOR MOVERS: Among the noteworthy gainers was Presidio (PSDO), which surged 22% after entering into a definitive agreement to be acquired by funds advised by BC Partners in an all-cash transaction valued at approximately $2.1B, including Presidio's net debt.
Also higher was Purple (PRPL), which gained 25% after reporting quarterly results.
Among the notable losers was Myriad Genetics (MYGN), which plunged 42% after it reported downbeat Q4 results and provided lower than expected guidance for Q1 and fiscal 2020.
Also lower after reporting quarterly results were recent IPOs Luckin Coffee (LK) and RealReal (REAL), which fell a respective 16% and 10%.
INDEXES: Near midday,
the Dow was down 600.44, or 2.28%, to 25,679.47, the Nasdaq was down 210.88, or 2.63%, to 7,805.48, and the S&P 500 was down 67.11, or 2.29%, to 2,859.21.