Stocks pull back after yesterday's rally as U.S.-China tensions remain high
Stocks are running in the red, but only modestly so, following yesterday's strong rally on Wall Street. Yesterday the U.S. Senate passed a bill that could potentially bar Chinese companies from listing on U.S. exchanges if it becomes law. The White House has now thrown more fuel on the fire with the release of a 20-page dossier of complaints about China, in which it accuses Beijing of predatory economic policies, military build-up, disinformation, and human rights violations. There remains cautious optimism over the reopening of economies, though that might be challenged by reports that infections in parts of China, and possibly a new strain of the COVID-causing virus, are rising.
ECONOMIC EVENTS: In U.S. data, initial jobless claims fell 249,000 to 2.44M in the week ended May 16, bringing the 4-week average down to about 3.04M from 3.54M.
The Philly Fed index rose 13.5 points to -43.1 in May. Markit's manufacturing PMI edged up modestly to 39.8 in the flash May print from 36.1 in April. Existing home sales plummeted 17.8% to a 4.33M rate in April, marking the biggest drop since July 2010 and the slowest pace since July 2011. The leading index dropped another 4.4% to 98.8 in April following the historic 7.4% decline in the prior month.
TOP NEWS: Shares of Best Buy (BBY) are about 5% lower near noon after the electronics retailer reported its domestic revenue decreased 6.7% versus last year as it shifted all its stores to a curbside-only operating model in the middle of Q1 amid the COVID-19 pandemic. Best Buy, which still sees "a high level of uncertainty" at the macro and micro level, said it expects its Q2 sales rate to "be pressured."
Meanwhile, fellow retailers Macy's (M) and TJX (TJX) are up 3.5% and 6%, respectively, after reporting on their quarterly results and discussing their reopening plans on their associated earnings calls.
Shares of Expedia (EXPE) are down 1% following the online travel agency's quarterly report. Barclays analyst Deepak Mathivanan said the company reported Q1 results largely as expected, impaired by a sharp decline in new bookings and spike in cancellations due to the COVID-19 pandemic, but also noted that new bookings are now growing modestly from depressed levels. Furthermore, the company has taken steps to improve its cost structure, which should help profit margins materially over long-term, Mathivanan tells investors.
Starbucks (SBUX) issued a business update in the form of a letter from CEO Kevin Johnson to the company's employees. Stephens analyst James Rutherford believes the coffee company's leader expressed confidence in an eventual recovery, but tempered near-term expectations with his missive.
Amazon (AMZN), which typically holds its Prime Day shopping event in July, is moving the promotion to September amid strains on the company's warehouses due to surging demand, The Wall Street Journal's Dana Mattioli reported.
MAJOR MOVERS: Among the noteworthy gainers was Aurora Cannabis (ACB), which rose 24% after it agreed to acquire U.S. CBD company Reliva for $40M in stock. Also higher were L Brands (LB) and BJ's Wholesale (BJ), which gained a respective 16% and 13% after reporting quarterly results.
Among the notable losers was International Game (IGT), which slid 5% after analysts from Societe Generale and Credit Suisse downgraded the stock.
Also lower were Huya (HUYA) and Boot Barn (BOOT), which fell 11% and 6%, respectively, after reporting quarterly results.
INDEXES: Near midday, the Dow was down 48.47, or 0.20%, to 24,527.43
, the Nasdaq was down 50.62, or 0.54%, to 9,325.15
, and the S&P 500 was down 15.61, or 0.53%, to 2,956.00