Stocks mixed near noon after Buffett announces exit from airlines
U.S. equities are off their overnight lows and the major averages have turned mixed with the Nasdaq seeing a modest gain near noon. Renewed worries about the relationship between the U.S. and China and diminished hopes for a "V-shaped" continue weighing on stocks at the start of another busy week for corporate reports. A total of 139 S&P companies are on tap to report earnings this week following last week's updates from the largest names in technology.
ECONOMIC EVENTS: In U.S. data, factory orders dropped 10.3% in March, which was a bit better than feared.
Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now over 3.5M confirmed cases of COVID-19 worldwide and 248,164 deaths due to the disease.
TOP NEWS: Shares of the major airline operators are plunging after billionaire investor Warren Buffett revealed over the weekend at Berkshire Hathaway's (BRK.A) virtual annual meeting that he sold the company's positions in U.S. airlines. Berkshire previously had stakes in Delta Air Lines (DAL), American Airlines (AAL), Southwest Airlines (LUV) and United Airlines (UAL). "The world has changed" because of the coronavirus, Buffett told shareholders. Echoing Buffett's sentiments, Barclays analyst Brandon Oglenski downgraded the North American Airlines sector to Neutral from Positive, saying the future is uncertain on travel demand, but definite on "plenty of additional debt." Oglenski cut price targets across the sector and downgraded American Airlines to Underweight from Equal Weight and Delta Air Lines to Equal Weight from Overweight.
On Friday afternoon, Gilead Sciences (GILD) confirmed that the FDA granted emergency use authorization, or EUA, for the investigational antiviral remdesivir to treat COVID-19. On CBS' "Face of the Nation" this weekend, Gilead CEO Daniel O'Day said, "We intend to get [remdesivir] to patients in the early part of this next week, beginning to work with the government which will determine which cities are most vulnerable and where the patients are that need this medicine. We've donated the entire supply that we have within our supply chain and we did that because we acknowledge and recognize the human suffering, the human need here, and want to make sure nothing gets in the way of this getting to patients."
Additionally, Roche (RHHBY) announced that the Food and Drug Administration has issued an Emergency Use Authorization for its new Elecsys Anti-SARS-CoV-2 antibody test, which is designed to help determine if a patient has been exposed to the SARS-CoV-2 virus and if the patient has developed antibodies against SARS-CoV-2. The FDA has also made the EUROIMMUN AntiSARS-CoV-2 ELISA test available under an Emergency Use Authorization, according to a post to the agency's website. EUROIMMUN is a PerkinElmer (PKI) company.
Following media reports on Friday, Telefonica (TEF) confirmed discussions with Liberty Global (LBTYA) on a potential integration of their respective telecommunications businesses in the United Kingdom. The process initiated by both parties is in a "negotiation phase, not being able to guarantee, to this date, neither the precise terms nor the probability of its success," Telefonica reported.
David Joyce, President and CEO of GE Aviation, told employees today in a message that global traffic is expected to be down approximately 80% in the second quarter when compared to the start of the pandemic's effect in China in early February. "To protect our business, we have responded with difficult cost-cutting actions over the last two months. Unfortunately, more is required as we scale the business to the realities of our commercial market. We are developing our plan for permanent reductions to our global employee base that we anticipate will bring our total reductions this year to as much as 25%," including both voluntary and involuntary actions already announced, Joyce told members of the General Electric (GE) unit.
MAJOR MOVERS: Among the noteworthy gainers was Stemline (STML), which surged 155% after Menarini Group announced an agreement to acquire the company in a transaction valued up to $677M.
Also higher was Canopy Growth (CGC), which rose 2% after Constellation Brands (STZ) raised its stake in the cannabis company to 38.6%.
Among the notable losers was Oxford Lane (OXLC), which fell 22% after it reported quarterly results and said it expects to reduce or suspends its distributions.
Also lower after reporting quarterly results were Summit Midstream (SMLP) and Pitney Bowes (PBI), which dropped 28% and 20%, respectively.
INDEXES: Near midday, the Dow was down 186.61, or 0.79%, to 23,537.08, the Nasdaq was up 56.12, or 0.65%, to 8,661.07, and the S&P 500 was down 7.36, or 0.26%, to 2,823.35.