Stocks drop to kick off Q2 as COVID-19 death toll climbs
Stocks began April and the second quarter with steep losses, picking up where they left off after a dismal first quarter. The coronavirus announcements in the last 18 hours were generally downbeat, with President Trump warning last night that 100,000 to nearly 250,000 fatalities may be possible in the U.S. even after the aggressive steps that are being taken.
ECONOMIC EVENTS: In U.S. data, ADP reported private payrolls fell "only" 27,000 in March, which was not as bad as many had forecast. However, ADP acknowledged the data don't really reflect the realities on the ground as a lot of the firings have taken place after the week that ended its survey. The ISM manufacturing index dropped 1.0 point to 49.1 in March, which was also not as bad as feared. Markit's manufacturing PMI was revised down to 48.5 in the final print for March. That was a little lower than the 49.2 flash reading for the month and down 2.2 points from February's 50.7 reading. Construction spending dropped 1.3% in February.
In COVID-19 news, The Hill reported that Florida Governor Ron DeSantis said he will sign an executive order requiring the state's residents to limit their movement outside of their homes. DeSantis has faced intense criticism for refusing to issue a stay-at-home order, the report noted.
Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now 911,308 confirmed cases of COVID-19 and 45,497 deaths due to the disease.
In China, the Caixin manufacturing PMI climbed 9.8 points to 50.1 in March, almost fully recovering from the 10.8 point drop to the record low of 40.3 in February. The better than expected bounce is in line with the surprising 16.3 point jump in the official index to 52.0.
TOP NEWS: Shares of General Motors (GM) fell 7.3% after the automaker announced that it delivered 618,335 vehicles in the U.S. in the first quarter of 2020, a decrease of about 7% compared to a year ago. "The industry experienced significant declines in March due to the outbreak of COVID-19," noted GM in its sales announcement. Meanwhile, FCA US (FCAU) reported a 10% decline in its first quarter sales to 446,768 vehicles, also noting that "the strong momentum in January and February was more than offset by the negative economic impact of the coronavirus in March." Additionally, Toyota North America (TM) reported that sales in March fell 36.9% on a volume basis and 31.8% on a daily selling rate basis year-over-year.
In M&A news, T-Mobile (TMUS) announced that it has officially completed its merger with Sprint (S) to create the new T-Mobile. The company also announced that with close of the merger, it has successfully completed its long-planned CEO transition from John Legere to Mike Sievert ahead of schedule.
Last night, Xerox (XRX) announced that "the current global health crisis and resulting macroeconomic and market turmoil caused by COVID-19 have created an environment that is not conducive" to the company continuing to pursue an acquisition of HP Inc. (HPQ). The smaller business equipment maker has withdrawn its tender offer to acquire its larger rival and will no longer seek to nominate a slate of candidates to HP's board.
Meanwhile, Jason Kilar, founding CEO of Hulu and former senior VP at Amazon (AMZN), was named CEO of AT&T's (T) WarnerMedia, effective May 1. Following the announcement, Kilar said in an interview with CNBC that it is "absolutely" still the plan to launch HBO Max in May.
Additionally, the Wall Street Journal reported that President Trump is scheduled to meet Friday with the heads of some of the largest U.S. oil companies to discuss government measures to help the industry weather an unprecedented oil crash. The meeting is to take place at the White House and will include ExxonMobil (XOM) Chief Executive Darren Woods, Chevron (CVX) Chief Executive Mike Wirth, Occidental Petroleum (OXY) Chief Executive Vicki Hollub and Harold Hamm, executive chairman of Continental Resources (CLR), according to the Journal.
MAJOR MOVERS: Among the noteworthy gainers was Kinross Gold (KGC), which rose over 11% after it said its mines continue to operate and have not materially been impacted by the COVID-19 pandemic. The company also withdrew guidance for fiscal 2020 in light of the outbreak. Also higher was Amarin (AMRN), which surged 24.5% after Jefferies analyst Michael Yee hosted a conference call with life sciences patent lawyer Jacob Sherkow to discuss the Vascepa patent litigation. During the call, Sherkow said that he believes Amarin has a 50% chance to win an appeal and a more than 80% chance of getting an injunction.
Among the notable losers was Capri Holdings (CPRI), which fell 17.5% after Fitch downgraded Capri to BB+ from BBB- with a negative outlook. Also lower was Whiting Petroleum (WLL), which plunged 44.5% after it filed for Chapter 11 bankruptcy protection. In addition, Immunomedics (IMMU) dropped 24.8%, with Cowen analyst Phil Nadeau viewing the selloff as a result of concerns related to the FDA's Form 483 observations from a recent inspection of the company’s New Jersey facility.
INDEXES: The Dow fell 973.65, or 4.44%, to 20,943.51, the Nasdaq lost 339.52, or 4.41%, to 7,360.58, and the S&P 500 declined 114.09, or 4.41%, to 2,470.50.