Stocks rising as Sanders drops out of presidential race
Stocks began the trading day with solid gains and have taken a leg higher after Senator Bernie Sanders announced he will suspend his presidential campaign, clearing the way for Joe Biden to secure the Democratic nomination and set up a show down between the former Vice President and President Donald Trump. Outside of political news, investors may be reacting to additional signs that pandemic curves may be flattening and optimism that lockdowns may be at least partially relaxed soon.
ECONOMIC EVENTS: There was no notable U.S. data released this morning. This afternoon, the minutes to the Federal Reserve's emergency March 15 meeting will be released.
Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now 1,450,343 confirmed cases of COVID-19 and 83,568 deaths due to the disease.
TOP NEWS: McDonald's (MCD) reported that its global comparable restaurant sales declined 3.4% in the first quarter, while its U.S. same-store sales rose 0.1%. After a strong start to the quarter, global comparable sales declined 22.2% in March, including a 13.4% decline in the U.S., as pandemic restrictions took hold. Consistent with many of its peers, McDonald's withdrew its 2020 and long-term guidance, which was a decision that BMO Capital analyst Andrew Strelzik said was "not surprising given current uncertainty."
The Wall Street Journal reported that Amazon (AMZN) is suspending its Amazon Shipping service, also known as "Ship with Amazon," in June because, as the company is quoted as having said, it "needs its people and capacity to handle a surge in its own customers' orders." Analysts at Credit Suisse, JPMorgan and BofA all said they expects shares of both FedEx (FDX) and UPS (UPS) to react favorably to the Wall Street Journal's report.
Carson Block's Muddy Waters this morning announced a new short position in eHealth (EHTH), arguing that the company's "highly aggressive accounting masks [...] a significantly unprofitable business." Meanwhile, shares of Luckin Coffee (LK) were halted before the open on Tuesday pending news, and have yet to resume trading. Luckin is another short target of Block, who accused the Chinese company of fraud months before its recent revelation that it found an employee who was inflating sales figures.
Disney (DIS) might require theme park visitors to have their temperatures checked when they reopen after coronavirus restrictions on public gatherings are lifted, Executive Chairman Bob Iger said in an interview with Barron's. Last night, Wells Fargo analyst Steven Cahall downgraded Disney to Equal Weight from Overweight with a price target of $107, down from $155, citing his concerns about the "unique and severe downturn for Parks." Cahall forecasts zero park attendance for the second half of FY20 and roughly 50% capacity in FY21, he told investors.
MAJOR MOVERS: Among the noteworthy gainers was Annaly Capital (NLY), which rose 28% after it provided a Q1 earnings guidance update.
Also higher was Novavax (NVAX), which gained 20% after the company said it identified a coronavirus vaccine candidate.
Among the notable losers was TAL Education (TAL), which is down 6.5% near midday after reporting last night that the company discovered "certain employee wrongdoing" in the company's routine internal auditing process.
Also lower was Glu Mobile (GLUU), which fell 6% after Stephens analyst Jeff Cohen downgraded the stock to Underweight from Equal Weight.
INDEXES: Near midday, the Dow was up 585.50, or 2.58%, to 23,239.36, the Nasdaq was up 154.40, or 1.96%, to 8,041.66, and the S&P 500 was up 63.24, or 2.38%, to 2,722.65.