Stocks began the session in the red, but reversed their losses as financial stocks bounced into the green and gave a lift to the overall indexes. News of an easing in Volcker Rule restrictions that would allow banks more flexibility gave a boost to the sector ahead of the bank stress test results that are due after the market close.
ECONOMIC EVENTS: In U.S. data, the first quarter GDP contraction rate of 5.0% was left unrevised, as expected, in the third look at the data. The advance goods trade deficit widened to $74.3B in May from $70.7B in the prior month as exports fell 5.8% to $90.1B and imports dropped 1.2% to $164.4B. Initial jobless claims fell 60,000 to 1.48M in the week ended June 20. Durable orders bounced 15.8% in May, which was a little firmer than expected.
In COVID-19 news, Texas Governor Greg Abbott announced that he has ordered a "temporary pause" on additional reopening int eh state due to the recent increase in positive virus cases and hospitalizations. Meanwhile, Florida reported a 4.6% increase in COVID-19 cases from yesterday, Arizona reported 3,056 new COVID-19 cases, and California reported a 2.8% increase in virus cases from yesterday.
TOP NEWS: Shares of a number of banking stocks were strong after the Federal Reserve announced that five federal regulatory agencies finalized a rule modifying the Volcker rule's prohibition on banking entities investing in or sponsoring hedge funds or private equity funds, known as covered funds. Like the proposed rule from January, the final rule modifies three areas of the rule by streamlining the covered funds portion of rule; addressing the extraterritorial treatment of certain foreign funds; and permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker rule was intended to address, the Federal Reserve stated. Publicly traded large banks include Bank of America (BAC), Citi (C), Goldman Sachs (GS), JPMorgan (JPM), Morgan Stanley (MS), U.S. Bancorp (USB) and Wells Fargo (WFC).
Shares of Disney (DIS) were down for a second day in a row as plans for its park reopenings have become more murky. Yesterday morning it was reported that workers were urging Disney and government officials to reconsider opening Disney World next month as coronavirus cases surge in Florida and yesterday night the company confirmed that Disneyland's reopening in California is being delayed beyond the initially targeted date of July 17, with no alternative date given. Separately, The Wall Street Journal's R.T. Watson reported that Walt Disney is considering postponing the July 24 release of "Mulan", citing a person familiar with the matter. The rescheduling could call into question hopes across Hollywood and the movie-theater industry to have cinemas up and running next month.
Macy's (M) announced details of a restructuring that the department store operator said "will align its cost base with anticipated near-term sales as the business recovers from the impact of the COVID-19 pandemic." The company will reduce corporate and management headcount by approximately 3,900 and has reduced staffing across its stores portfolio, supply chain and customer support network, which it will adjust as sales recover, Macy's said.
Boeing (BA) shares were 1% lower after Berenberg analyst Andrew Gollan downgraded the stock to Sell with a $150 price target. The analyst suggests investors "lock in any gains" ahead of what should be weak Q2 results next month. Given Boeing's ongoing challenges, the 737 MAX outlook being under more pressure and its high leverage, Gollan sees the shares "pricing in too much optimism," he told investors.
Meanwhile, Bloomberg reported that Apple (AAPL) will reclose 14 stores in Florida amid a COVID-19 spike in the state. The move follows the tech giant yesterday reclosing stores in Houston as well.
MAJOR MOVERS: Among the noteworthy gainers was Athersys (ATHX), which rose 29.7% after BofA analyst Greg Harrison initiated coverage of the stock with a Buy rating and $5 price target. Also higher was Accenture (ACN), which gained 7.7% after reporting quarterly results.
Among the notable losers was uniQure (QURE), which slid 21.8% after announcing a licensing agreement providing CSL Behring with exclusive global rights to etranacogene dezaparvovec, uniQure's investigational gene therapy for patients with hemophilia B. Also lower was KB Home (KBH), which fell 11.8% after reporting quarterly results.
INDEXES: The Dow rose 299.66, or 1.18%, to 25,745.60, the Nasdaq gained 107.84, or 1.09%, to 10,017.00, and the S&P 500 advanced 33.43, or 1.1%, to 3,083.76.
Bank of America
+0.89 (+3.73%)
Wells Fargo
+1.22 (+4.67%)
JPMorgan
+3.21 (+3.39%)
Morgan Stanley
+1.84 (+3.92%)
Citi
+1.88 (+3.70%)
Goldman Sachs
+9.4 (+4.75%)
Disney
-0.69 (-0.62%)
Macy's
-0.28 (-4.13%)
Boeing
-1.75 (-0.99%)
Apple
+4.8 (+1.33%)
Athersys
+0.665 (+30.09%)
Accenture
+15.575 (+7.72%)
uniQure
-13.64 (-21.70%)
KB Home
-3.94 (-11.80%)