Stocks resume selloff after holiday weekend respite
The major averages are sharply lower in Tuesday's trading, picking up where they left off before the long holiday weekend. Tech is leading the charge lower once again, with the Nasdaq the laggard among the major averages.
ECONOMIC EVENTS: In the U.S., the NFIB small business optimism index bounced back 1.4% to 100.2 in August.
TOP NEWS: Shares of Shares of Tesla (TSLA) are under pressure on Tuesday after not being included in S&P 500 Index. Tesla had been widely speculated as a potential entrant into the index. Calling the omission to S&P Index "surprising," Baird analyst Ben Kallo noted that Tesla met all the criteria necessary to be added to the index and that he sees this as only a delay.
Meanwhile, a hopeful Tesla rival, Nikola (NKLA), announced a strategic partnership with General Motors (GM). The pact, which begins with the Nikola Badger, will see Nikola utilize General Motors' Ultium battery system and Hydrotec fuel cell technology. As part of the deal, Nikola will exchange $2B in newly issued common stock for the in-kind services and access to General Motors' "global safety-tested and validated parts and components," the companies said. In response to the news, Nikola shares are up 50% while GM shares have risen 11% in Tuesday afternoon trading.
Production problems at a Boeing (BA) 787 Dreamliner factory have prompted air-safety regulators to review quality-control lapses potentially stretching back almost a decade, The Wall Street Journal reported over the weekend. This morning, Boeing said in a statement to media outlets that inspections stemming from production problems of its 787 Dreamliners are slowing deliveries. "We are taking time to thoroughly inspect completed 787s to ensure that they are free of the issues and meet all engineering specifications prior to delivery. We expect these inspections to affect the timing of 787 deliveries in the near-term," Boeing announced.
Apple (AAPL) announced an event, to be held from Apple Park on September 15, without offering details on the nature or contents of the meeting. Bloomberg is reporting the event will be focused on the iPad, not the company's new iPhone models.
In COVID-19 news, the CEOs of AstraZeneca (AZN), BioNTech (BNTX), GlaxoSmithKline (GSK), Johnson & Johnson (JNJ), Merck (MRK), Moderna (MRNA), Novavax (NVAX), Pfizer (PFE), and Sanofi (SNY) announced a pledge, outlining a "united commitment to uphold the integrity of the scientific process as they work towards potential global regulatory filings and approvals of the first COVID-19 vaccines." The statement reads in part: "We, the undersigned biopharmaceutical companies, want to make clear our on-going commitment to developing and testing potential vaccines for COVID-19 in accordance with high ethical standards and sound scientific principles. The safety and efficacy of vaccines, including any potential vaccine for COVID-19, is reviewed and determined by expert regulatory agencies around the world, such as the United States Food and Drug Administration. FDA has established clear guidance for the development of COVID-19 vaccines and clear criteria for their potential authorization or approval in the US. FDA's guidance and criteria are based on the scientific and medical principles necessary to clearly demonstrate the safety and efficacy of potential COVID-19 vaccines. More specifically, the agency requires that scientific evidence for regulatory approval must come from large, high quality clinical trials that are randomized and observer-blinded, with an expectation of appropriately designed studies with significant numbers of participants across diverse populations...We believe this pledge will help ensure public confidence in the rigorous scientific and regulatory process by which COVID-19 vaccines are evaluated and may ultimately be approved. We believe this pledge will help ensure public confidence in the rigorous scientific and regulatory process by which COVID-19 vaccines are evaluated and may ultimately be approved." The companies also pledged to "only submit for approval or emergency use authorization after demonstrating safety and efficacy through a Phase 3 clinical study that is designed and conducted to meet requirements of expert regulatory authorities such as FDA."
MAJOR MOVERS: Among the noteworthy gainers was Albireo Pharma (ALBO), which surged 44% after its PEDFIC 1 Phase 3 trial met its primary endpoints.
Also higher was Camping World (CWH), which rose 14% after JPMorgan analyst Ryan Brinkman upgraded the stock to Overweight from Neutral, saying the company should continue to benefit from "demand tailwinds" in the wake of COVID-19.
Among the notable losers was Corbus Pharmaceutials (CRBP), which fell 74% after its RESOLVE-1 Phase 3 study did not meet its primary endpoint.
Also lower was ACM Research (ACMR), which declined 26% after Needham analyst N. Quinn Bolton downgraded the stock to Hold from Buy, saying that the company's business outlook could weaken due to its "material exposure" to Chinese chip giant SMIC. The downgrade follows reports that the Pentagon proposed for SMIC to be added to U.S. government trade blacklist.
INDEXES: Near midday, the Dow was down 384.85, or 1.37%, to 27,748.46, the Nasdaq was down 273.81, or 2.42%, to 11,039.33, and the S&P 500 was down 59.42, or 1.73%, to 3,367.54.