Following yesterday's limit down trading action, futures hit the limit up prior to the open as investors appeared to be buying the dip following stocks' worst one-day loss since the 2008 financial crisis. Investors also seemed to be anticipating futher government stimulus action after President Donald Trump announced last night that he will be holding a press conference today to discuss just that. However, CNBC reported that administration officials said The White House is not ready to roll out specific economic proposals in its response to the coronavirus outbreak and some officials were "stunned" by Trump's claim Monday that he would be announcing a plan today. Robert Costa of the Washington Post also noted that Mitch McConnell has made it clear to allies in recent days that he does not like the payroll tax cut idea floated by President Trump as a potential economic boost. The averages are well off their early session highs as investors digest the DC headlines and news from Europe, including the full quarantine implemented by Italy.
ECONOMIC EVENTS: In the U.S., little economic data of note was reported.
In Europe, the Italian government extended its quarantine measures to the entire country, meaning no travel is permitted other than for work or medical emergencies across the nation as of today. Meanwhile, the number of euro area cases outside Italy has also risen sharply.
TOP NEWS: Amid the ongoing fallout from the coronavirus outbreak, airlines and cruiselines continue to be under significant pressure. On that front this morning, Royal Caribbean (RCL) announced that the company has increased its revolving credit capacity by $550M and is pursuing additional actions to improve its liquidity. Royal is also withdrawing its first quarter and full-year 2020 guidance, citing "the recent government actions and the heightened impact and uncertainty of changes in the magnitude, duration and geographic reach of COVID-19." Delta Air Lines (DAL) is also withdrawing its March quarter and fiscal year financial guidance, stating that it currently expects March quarter unit revenue to be down mid- to high-single digits. Delta has also decided to defer $500M in capital expenditures, delay $500M of voluntary pension funding, suspend share repurchases and is undertaking cost reduction initiatives, the airline announced this morning. Meanwhile, United Airlines (UAL) also withdrew its Q1 guidance, stating that it now expects to incur a loss in the quarter. United also said it has pulled down 10% of domestic schedules in April, has suspended share buybacks under its existing repurchase program and has raised an incremental $2B in new liquidity. Spirit Airlines (SAVE) also said its previous FY20 guidance "should not be relied upon" given the uncertainty surrounding the impact of COVID-19.
In a situation with echoes of the scandal that heavily impacted Wells Fargo (WFC), the Consumer Financial Protection Bureau alleged in a complaint that Fifth Third Bank (FITB) ignored signs that employees were opening unauthorized accounts to meet aggressive sales goals. Fifth Third issued a response, rejecting the allegations and stating that it will defend itself "vigorously and is confident in the outcome" in the civil suit it contends is "unnecessary and unwarranted."
Occidental Petroleum (OXY) shares were halted before the oil and gas explorer announced that its board approved a reduction in the company's quarterly dividend to 11c per share from 79c per share, effective July 2020. The company also announced it will reduce 2020 capital spending to between $3.5B and $3.7B from $5.2B to $5.4B and will implement additional operating and corporate cost reductions "due to the sharp decline in global commodity prices." Vicki Hollub, Occidental CEO, noted that these actions "lower our cash flow breakeven level to the low $30s WTI, excluding the benefit of our hedges, positioning us to succeed in a low commodity price environment."
MAJOR MOVERS: Among the noteworthy gainers were Centene (CNC), Cigna (CI) and Humana (HUM) as health care plan operators bounced back a bit after Vice President Mike Pence announced plans to meet with the group this week.
Among the notable losers were Southwestern Energy (SWN) and Noble Energy (NBL), which are being impacted by turmoil in the energy markets.
INDEXES: Near midday, the Dow was up 192.83, or 0.81%, to 24,043.85, the Nasdaq was up 113.50, or 1.43%, to 8,064.18, and the S&P 500 was up 29.62, or 1.08%, to 2,776.18.
Royal Caribbean
+3.42 (+7.08%)
Delta Air Lines
-0.74 (-1.70%)
United Airlines
+2.355 (+5.06%)
Spirit Airlines
-1.05 (-4.91%)
Fifth Third
-0.33 (-1.80%)
Occidental Petroleum
+1.9 (+15.20%)
Southwestern Energy
-0.25 (-16.39%)
Noble Energy
-0.78 (-8.36%)
Centene
+2.48 (+4.48%)
Cigna
+8.94 (+4.93%)
Humana
+12.49 (+3.70%)