Stocks edge higher as Treasury projects Q2 borrowings five times prior quarterly record
Worries about the relationship between the U.S. and China and diminished hopes for a "V-shaped" recovery didn't stop stocks from rising 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. Meanwhile, the U.S. Treasury Department said that the government is set to borrow a record $2.99T in Q2, which is over five times the prior $530B record amount set in the third quarter of 2008 during the last recession.
ECONOMIC EVENTS: In U.S. data, factory orders dropped 10.3% in March, which was a bit better than feared.
In coronavirus news, 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. In New York, Governor Andrew Cuomo reported 226 virus deaths yesterday versus 280 the day before, adding that certain regions in the state can start to reopen on May 15 with conditions.
Meanwhile, The New York Times reported that U.S. President Donald Trump's administration is privately projecting a steady increase in the number of COVID-19 cases and deaths over the next few weeks, reaching roughly 3,000 daily deaths on June 1. Additionally, the Wall Street Journal reported that the U.S. Treasury Department said that the government is set to borrow a record $2.99T in Q2, over five times as much as it borrowed during the 2008 recession, as spending soars to battle the COVID-19 crisis.
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.
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 (GE), 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.
Meanwhile, shares of Tyson Foods (TSN) fell 7.9% after the meat processor reported downbeat results for the second quarter, saying that it expects COVID-19 to negatively affect volumes for the rest of the year.
MAJOR MOVERS: Among the noteworthy gainers was Stemline (STML), which surged 154.8% 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 3.1% after Constellation Brands (STZ) raised its stake in the cannabis company to 38.6%.
Among the notable losers was Oxford Lane (OXLC), which fell 21.4% 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 23.2% and 13.7%, respectively.
INDEXES: The Dow rose 26.07, or 0.11%, to 23,749.76, the Nasdaq gained 105.77, or 1.23%, to 8,710.72, and the S&P 500 advanced 12.03, or 0.42%, to 2,842.74.