The definitive collection of the best investing stories Business Insider published during the week ended June 23. The latest on stock market and business news during the coronavirus outbreak. The Dow Jones, S&P 500 and AUD/USD initially tumbled on fears of a US-China trade deal breakdown. But then, an about-face reversal from US trade adviser Peter Navarro quelled market volatility.. Good morning, afternoon and evening all. Any charts, technical
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By Eamonn Sheridan A conversation on the latest market-moving news.
With major US stock indexes back within shouting distance of record highs reached before the coronavirus crash, one might think the market is headed back to business as usual.
Not so fast.
Even if those lofty levels are attained in the coming weeks and months — something viewed as eminently achievable by JPMorgan — there’s a growing consensus that long-standing market conditions will be turned on their head. Suddenly, simply buying proven mega-cap tech winners and banking on their prices to soar may not be the best strategy.
Many experts across Wall Street have instead trained their attention on the areas of the market best positioned to capitalize on the sudden wave of dislocation.
Jeffrey Kleintop, the chief global investment strategist at Charles Schwab, falls into that camp. He sees a surprising stock-market rotation playing out for the first time in 12 years. And rather than tout the growth merits of tech, he’s far more interested in the upside offered by by financial and industrial shares — plus international stocks.
Morgan Stanley’s US equity chief Mike Wilson also has some interesting recommendations pegged to his expectation for a swift V-shaped economic recovery. He’s already advising investors to hitch their wagons to so-called cyclical stocks, which outperform during expansion periods.
But he’s not talking about tech. He instead sees the opportunities in financial and small-cap shares.
Those are ultimately just two examples of what the Investing team at Business Insider has explored over the past several days. See below for our best stories of the week, including a wide array of recommendations, strategies, and tips for navigating a historically uncertain landscape.
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Morgan Stanley’s Dennis Lynch and Kristian Heugh run the No. 1 US and international large-cap funds of the past decade. Both manage or co-manage several funds that have doubled investors’ money or better in recent years.
The two highly successful growth investors told Business Insider about the stocks that they think have the most potential in the new decade. Spoiler alert: they’re not sold on mega-cap tech titans like FANG in the long run.
Read the full story here:
Jefferies strategist Desh Peramunetilleke says investors don’t appreciate how many more companies are going to cut their dividends in the near future.
In response, he and his team created a six-step process to find the companies least likely to make those cuts and narrowed them down to 20 companies spread around the world. He says they’re worth a look for investors seeking reliable cash payouts going forward.
Read the full story here:
Morgan Stanley’s Michael Zezas says investors shouldn’t get overconfident about the possibility of a divided federal government after the 2020 elections.
He says full sweeps by either party are more likely than most traders appreciate, and that investors are misreading two key effects of a “blue wave” led by former Vice President Joe Biden. Zezas offers market recommendations for intrepid investors looking to reject these notions.
Read the full story here:
Heath Jones — a US Army neuroscientist, cohost of “The Multifamily Real Estate Experiment Podcast,” and co-owner of H Squared Capital — started investing in real estate after his income was reduced by 15%.
Jones employs a simple incremental value-add strategy that focuses on increasing the net operating income of a property. Today he has 23 units in total — a four-unit property, 16-unit building, and three single-family rentals.
Read the full story here:
Conventional market wisdom suggests an ideal time to buy cyclical stocks is during an economic upswing. The hard part? Knowing when such an expansion phase is playing out.
Mike Wilson, the chief US equity strategist at Morgan Stanley, says one is happening right now — and he’s all-in on a sharp V-shaped economic recovery.
Wilson points to the blue line in the chart above to highlight the massive upside he sees in cylical shares. He argues that if the economy is truly recovering, that line has much further to climb.
“New market leadership in the second half of the year could catch a lot of investors by surprise.”
— Jeffrey Kleintop, chief global investment strategist at Charles Schwab
Author: Joe Ciolli
Stocks Rise After Trump Reaffirms China Trade Deal: Live Updates
Two senators are questioning how meatpacking companies could justify exporting record amounts to China in April.
President Trump on Monday suspended new work visas through at least the end of the year. The sweeping order denies employment permits for hundreds of thousands of skilled foreign workers, like programmers. Seasonal hospitality workers and work-study students are also affected.
The president cited the pandemic, saying that the visa programs “pose an unusual threat to the employment of American workers.”
The business world reacted with anger. “Putting up a ‘not welcome’ sign for engineers, executives, IT experts, doctors, nurses and other workers won’t help our country, it will hold us back,” said Thomas Donohue of the U.S. Chamber of Commerce.
Technology firms, which account for the bulk of H-1B visas, were particularly aghast. “This is a full-frontal attack on American innovation and our nation’s ability to benefit from attracting talent from around the world,” said Todd Schulte of FWD.us, a pro-immigration advocacy group for big tech companies.
Google’s chief executive, Sundar Pichai, was “disappointed” by the decision:
In a statement, Amazon said that “preventing high skilled professionals from entering the country and contributing to America’s economic recovery puts American’s global competitiveness at risk.”
Facebook said “highly-skilled visa holders play a critical role in driving innovation — at Facebook and at organizations across the country — and that’s something we should encourage, not restrict.”
The chairman of Twitter, Patrick Pichette (who is Canadian), suggested an alternative: “A message to all you H-1B seekers; just look to the North, where we welcome you (and your family) with open arms.”
According to government data, the suspended visa categories accounted for about 600,000 workers in 2019.
A skilled-worker visa, the H-1B is used by U.S. employers to fill roles in tech, finance, accounting and other specialized fields. New H-1B visas are capped at 85,000 a year, and about three-quarters are used by technology companies. There were 189,847 workers on H-1Bs in 2019.
The H-2B visa is used by U.S. employers for temporary nonagricultural jobs, such as cooks, landscapers and groundskeeping staff, cleaners and forestry and conservation workers. There were 97,623 workers on such visas last year. Officials said there would be exemptions for food processing workers under President Trump’s executive order.
The H-4 allows spouses and families of H-1B and H-2B visa holders to live in the United States.
The J visa category is for exchange program applicants coming to the United States to study or work, including au pairs, interns, camp counselors and researchers. There were an estimated 230,000 people on J visas in 2019. Two administration officials suggested that parents could seek waivers to the ban on au pairs.
The L visa is for international companies who want to transfer managers or executives to U.S. branches for monthslong or yearslong stints. There were 76,988 such visas in 2019.
Monday’s order also extends a 60-day prohibition on the issuance of green cards to most foreigners looking to live in the United States that the president ordered in April.
Administration officials said the president’s order would not affect people outside the United States who already have valid visas or seasonal farm workers, whose annual numbers have ranged from a low of about 50,000 to a high of about 250,000 in the past 15 years, the New York Times’s Michael D. Shear and Miriam Jordan reported. There will be a narrow exception under Mr. Trump’s ban for certain medical workers dealing with coronavirus research, officials said.
Two prominent Democrats in the Senate are questioning how meatpacking companies could justify exporting record amounts to China in April while warning of an impending shortage of pork and beef across the United States.
Senators Elizabeth Warren and Cory Booker sent a letter late Monday to the chief executives of Smithfield, Tyson, Cargill and JBS, criticizing their China exports at the same time they were lobbying the Trump administration to keep their plants open amid the pandemic because they wanted to keep feeding Americans.
The senators said the companies were putting meat workers’ lives in danger, while also raising food prices for American consumers.
“This pattern of behavior raises questions about whether you are living up to your commitments to the workers who produce your pork and beef; the communities in which you operate, and the nation’s consumers that rely on your products to feed their families,’’ the senators wrote.
The letter was prompted by a report in The New York Times last week detailing how pork exports to China totaled a record 129,000 tons in April, as the American meat industry took advantage of surging and profitable demand from that Asian country.
The meat companies say much of the meat had been produced weeks ahead of when it was shipped to China in April and before packing plants became hot spots for the virus. After President Trump signed an executive order in late April to keep the plants operating, some of the large meat companies say they have switched their production to better meet domestic demand.
Stocks on Wall Street followed global markets higher on Tuesday, after President Trump reaffirmed the trade war truce between the United States and China and investors focused on new signs of economic recovery instead.
The S&P 500 rose nearly 1 percent, adding to a 0.7 percent climb on Monday. European markets rose more than 1 percent. Oil was up nearly 2 percent, with West Texas Intermediate, the main U.S. benchmark, trading over $41 a barrel.
Lifting sentiment were initial surveys of corporate purchasing managers that echoed other signals of a rebound underway in the United States, Britain and Europe. The IHS Markit composite purchasing managers index for the U.S. rose to 46.8 in June, up from 37 in May. A reading under 50 still signals economic contraction.
“The second quarter started with an alarming rate of collapse but output and jobs are now falling at far more modest rates in both the manufacturing and service sectors,” Chris Williamson, chief business economist at IHS Markit, said in a statement accompanying the data. “The improvement will fuel hopes that the economy can return to growth in the third quarter.”
The trading day began on a more volatile note. On Monday evening, Peter Navarro, Mr. Trump’s trade adviser, said “it’s over” when asked in an interview on Fox News about the trade war pact that was reached between the United States and China in January. The pact had eased trade tensions between the two countries but has since become a source of investor concern. China pledged to increase purchases of American agricultural products and other goods under the pact, but its struggles with the coronavirus put those promises into doubt.
Later on Monday, Mr. Trump confirmed that the pact was still in force. “The China Trade Deal is fully intact,” Mr. Trump wrote on Twitter. “Hopefully they will continue to live up to the terms of the Agreement!”
Jack Dorsey has won plaudits for his corporate activism during the coronavirus crisis, taking on President Trump in his role as Twitter’s chief executive and donating nearly a third of his total wealth to pandemic relief.
But at Square, a payments business where Mr. Dorsey is also chief executive, he is facing a growing chorus of unhappy customers.
Thousands of small enterprises that use Square to process credit card transactions — including plumbers, legal consultants and construction firms — have complained that the company recently began holding back 20 to 30 percent of the money collected from customers. The withholdings came with little warning, they said, and Square asserted the right to hang on to the money for the next four months.
Square told them that it was doing this to protect against risky transactions or customers who demanded their money back. But several affected businesses provided documents to The New York Times showing they had not had any returns or risk flags.
“It may not be the coronavirus that puts us out of business but actually the greed of Square that breaks the camel’s back,” said Jesse Larsen, the owner of PennyWise Contracting, a construction company in Olympia, Wash.
A Square spokesman said the company would publish a blog post on Tuesday to explain its new “rolling reserve” policy, the one that some merchants have experienced.
When office workers around the world went remote four months ago, many managers feared that productivity would collapse. The distractions of home — from child care to television — would wreak havoc on workdays, they thought.
Some individuals have had a harder time than others working from home, but many companies say productivity has remained at pre-pandemic levels, or even increased, The Times’s David Gelles writes. Without long commutes, small talk with colleagues and leisurely coffees in the break room, many workers — especially those who don’t have to worry about child care — are getting more done.
Companies are also discovering that processes and procedures they previously took for granted — from lengthy meetings to regular status updates — are less essential than once imagined. And though some executives are concerned about burnout, they are enjoying the gains for now.
“We’re seeing an increase in productivity,” said Fran Katsoudas, Cisco’s chief people officer.
A Deutsche Bank survey of workers in countries hard hit by the coronavirus found that on average, those in the United States felt they were more productive than before the pandemic, whereas those in Europe felt they were less productive.
Masayoshi Son, the billionaire who controls the investment giant SoftBank, got one step closer to offloading his stake in the long-troubled wireless carrier Sprint.
Months after Sprint closed its merger with T-Mobile in April, Mr. Son’s company announced its intention to sell its stake in the newly combined business. T-Mobile said on Monday that it would help sell nearly 200 million shares of Sprint held by SoftBank, valued at about $20 billion.
Mr. Son has for years tried to sell off his control of Sprint, a debt-laden business. He had long pushed for a merger with T-Mobile, which would allow him to reap some cash that could be used to shore up his other businesses.
An outspoken entrepreneur, Mr. Son has had to defend his struggling empire after weak performance in some of his investments, including WeWork. When the coronavirus pandemic hit, huge swaths of his empire saw drops in revenue.
SoftBank reported an operating loss of $12.7 billion for the fiscal year that ended in March, its first yearly loss in 15 years. T-Mobile, controlled by the German company Deutsche Telekom, has become a hefty challenger to its rivals Verizon and AT&T, with roughly 100 million customers across the country.
With companies pressing to figure out how to safely reopen workplaces, makers of everything from office furniture to smart ventilation systems are rushing to sell them products and services marketed as solutions.
Some companies, like makers of thermal cameras that sense skin temperature, are rebranding their wares as virus-containment fever-scanning products. Others are creating entirely new services.
And they have a captive market. To protect employees and reduce liability for virus outbreaks at work, companies are racing to comply with public health guidelines on issues like employee screening and social distancing. In the United States, the market for contact-tracing technologies for employers could soon be worth $4 billion annually, according to estimates from International Data Corporation, a market research firm.
But the preventive tools and pandemic workplace rules are so new — as is the emerging science on the virus — that it is too soon to tell how well, or if, they work.
“These are all untested theories and methods right now,” said Laura Becker, a research manager focusing on employee experience at I.D.C. “What is going to be the most effective component of all of these work force return strategies? We don’t know.”
Airlines continue to amass emergency funds to get them through the pandemic. United Airlines on Tuesday said it would raise $3 billion in a bond offering backed by its loyalty program, while American Airlines on Sunday said it would raise $3.5 billion in varied financing.
The 2021 Golden Globes will take place on Feb. 28, a date that the Oscars abandoned last week in an effort to salvage its 93rd installment in the wake of the coronavirus pandemic, the Hollywood Foreign Press Association said. Tina Fey and Amy Poehler will host the Golden Globes, which the press association said would continue to be “Hollywood’s party of the year.”
Reporting was contributed by David Gelles, Nathaniel Popper, Michael Corkery, Mohammed Hadi, Edmund Lee, Natasha Singer, Julie Creswell, Niraj Chokshi, Katie Robertson, Mary Williams Walsh and Brooks Barnes.
Dow Jones, S&P 500, AUD/USD: Trade Wars Still Matter, Navarro 180 Shows
- Dow Jones, S&P 500 futures, AUD/USD sink on initial fears of trade deal breakdown
- Peter Navarro pulls 180, Donald Trump clarifies the phase-one trade deal is intact
- What is the technical road ahead for Dow Jones futures and the Australian Dollar?
Dow Jones, S&P 500 and Nasdaq Composite futures initially turned sharply lower in Asia Tuesday morning trade as risk aversion engulfed financial markets. In an interview with Fox News, White House Trade Adviser Peter Navarro said that the trade deal with China is “over”. Mr Navarro linked this stark assessment to Beijing’s handling of the coronavirus outbreak, something that President Donald Trump has widely condemned.
Develop the discipline and objectivity you need to improve your approach to trading consistently
The sentiment-linked Australian Dollar and New Zealand Dollars declined at first and Dow Jones futures slipped over 1.4 percent at one point. This is as the haven-oriented US Dollar and anti-risk Japanese Yen capitalized on traders shifting to prioritizing liquidity over seeking returns. Growth-linked crude oil prices also followed lower as anti-fiat gold prices traded sideways, balancing conflicting cues as Treasury yields declined but the USD gained.
US-China relations were souring prior to this headline, particularly over Beijing’s seemingly tighter grip over Hong Kong. Fears of a breakdown in the phase-one trade deal may raise the risk of tit-for-tat tariff escalation between the two. This would consequentially add further uncertainty to the outlook for global growth.
However, about half an hour later, Peter Navarro walked back his initial statement. He clarified, saying that the comment on China was ‘taken wildly out of context’. His initial points were ‘not about the phase-one deal, which remains in place’. Moreover, he claimed to be speaking about a broad lack of trust between the US and China. Risk appetite recovered, reversing most of the initial risk-off surge.
President Donald Trump then clarified further that the trade deal is ‘fully intact’, erasing fears of a breakdown as sentiment fully recovered (at the time of writing).
Chart Created in TradingView
-Chart Courtesy of Analyst Daniel Moss, Follow Him on Twitter @DanielGMoss
Dow Jones futures remain in a consolidative setting after prices first topped at the 27312 – 27624 inflection area, and then bounced off the 24507 – 24792 zone on the daily chart below. Prices are now testing the 20-day moving average and a confirmed downside close with follow-through could raise the risk of a broader reversal. That may place the focus on immediate support.
Chart Created in TradingView
The Australian Dollar continues to trade sideways as AUD/USD pressures key rising support from March’s bottom. The 20-day moving average is holding up here as well and a push above 0.7032 exposes the 0.7064 – 0.7082 resistance range. Key support sits below at 0.6777 – 0.6840. A drop through the latter may open the door to a broader reversal.
Chart Created in TradingView
— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
Author: Daniel Dubrovsky
Trade ideas thread – Tuesday 23 June 2020
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Stock market live Monday: Tech leads market higher, travel stocks falter, Walmart climbs
U.S. equities started the week with slight gains on Monday, lifted by advances in mega-cap technology darlings Apple and Microsoft. However, worries about a resurgence in coronavirus cases kept the gains in check.
- Nasdaq closed up 1.11% for its 11th positive day in 12 at a new record close of 10,056.47 and only its 2nd close above 10K and its 20th record close this year
- Nasdaq is up 12.08% year to date
- Nasdaq is up 51.65% from its 52-week low of 6,631.42 on March 23
- S&P 500 closed up 0.65% for its second positive day in three
- S&P 500 is down 3.5% year to date
- S&P 500 is 42.25% above its 52-week low of 2,191.86 on March 23
- Seven out of 11 sectors were positive today led by tech up 1.67%
- Dow closed up 0.59% for its first positive day in four
- Dow is down 8.81% year to date
- Dow is 42.89% above its 52-week low of 18,213.65 on March 23 —Francolla, Pound
All three major indexes finished in positive territory on Monday, led by the Nasdaq up 1.1%. The Dow gained 152 points, or 0.6%, while the S&P 500 rose 0.7%. —Pound
Texas Gov. Greg Abbott said at a news conference Monday that the coronavirus is spreading at an “unacceptable rate” in the state, according to NBC 5 in Dallas-Fort Worth. Abbott warned during the news conference that the virus is spreading among younger people in settings such as bars. —Pound
U.S. stocks may be on pace for a solid start to the week, but that’s coming under thin trading. The SPDR S&P 500 ETF Trust (SPY), which tracks the broader market index, had traded just over 56 million shares with less than one hour left in the trading session. That’s well below the ETF’s 30-day volume average of 105.01 million. Volume across exchanges was not much better. FactSet data shows U.S. composite volume sat around 7.3 billion shares traded, below a 50-day average of 10.2 billion. —Imbert
With roughly one hour left in the trading session, the major average were headed for solid gains to start the week. The Dow was up more than 100 points, or 0.7%, while the S&P 500 also traded 0.7% higher. The Nasdaq Composite advanced 1.1%. —Imbert
Apple said Monday it will stop using chips built by Intel on Mac computers. Instead, the company will use its own. This change, according to Apple, will let the company offer faster performance on its computers. Apple’s first computers without Intel chips will be released before the end of 2020. Apple shares remained higher while Intel’s stock traded near its session high. —Imbert, Leswing
New Jersey Gov. Phil Murphy tweeted on Monday that casinos in the state can reopen starting July 2 at an operating capacity of 25%. This could benefit Caesars Entertainment, owner of the Caesars Palace hotel and casino in Atlantic City. Caesars shares were down nearly 2% in afternoon trading. —Imbert
Oil prices moved higher on Monday, boosted by supply cuts as well as an uptick in demand as the economy begins to reopen. West Texas Intermediate, the U.S. oil benchmark, settled 71 cents, or 1.79%, higher at $40.46 per barrel. This is the first time the contract has settled above the key $40 mark since early March. However, WTI did close off its highest levels of the day as rising coronavirus numbers capped upside gains. Oil is coming off its seventh positive week in the last eight. –Stevens
Famed short-seller Jim Chanos said Monday he is still betting against electric-car maker Tesla, even as the company’s stock has more than doubled in 2020. “We are still short Tesla,” Chanos, founder of Kynikos Associates, told Bloomberg TV in an interview. “I know people are counting on all kinds of growth going forward, but the fact of the matter is the company’s rate of growth has slowed dramatically.” Chanos noted the company’s revenues are likely to be flat for a sixth straight quarter and added Tesla is not a market leader in either electric car batteries or autonomous driving. “This company is a wonderful barometer of where people’s views are on companies and speculation because people see Tesla as they want to see it.” Tesla shares are up more than 138% year to date, surging about 90% this quarter alone. —Imbert
Reports indicate Apple may announce as soon as next week at its Developers Conference that it is moving all of its Macs from Intel to its own Arm chips beginning in next year. “We believe the move to ARM is likely to keep Apple ahead of its competition in terms of battery performance which could manifest itself in longer battery life, less fan noise and/or thinner laptops,” Goldman Sachs analyst Rod Hall said. But the move may not save the company any more money as the firm said “5G cost increases likely to more than offset this,” wrote Hall, who reiterated his sell rating on the tech giant. “Interestingly, our detailed analysis of incremental costs from 5G adoption in the iPhone results in a conservative negative cost impact of ~$2.9bn with actual impacts likely higher than that.” The firm did raise its price target to $263 from $246. Shares are up 2% in late trading. —Bloom
The New York Stock Exchange submitted an amended rule change on Monday to the Securities and Exchange Commission to allow for companies to go public using direct listings, Reuters reported. In December, the SEC declined a request by NYSE to allow companies going public through direct listings. —Pound, Reuters
An analyst at Jefferies initiated coverage of DraftKings with a buy rating and a price target of $55 per share. That target implies a 30% upside over the next 12 months. “DKNG is among the best positioned to capitalize on the growth of digital/sports wagering in the U.S., which we believe is in the initial stage of a decade-long acceleration,” said David Katz of Jefferies in a note to clients. —Imbert
- American Airlines — The airline was under pressure, falling about 7%, amid concerns the company would need to raise capital to stay afloat.
- Apple — The tech giant was up more than 2% after a Cowen analyst raised his price target on the stock to $400 per share from $335. The new target implies a 13% upside over the next 12 months.
- TripAdvisor — TripAdvisor shares fell after the company announced it expects a “significantly negative” adjusted EBITDA loss for the second quarter.
The major averages were up slightly on Monday as shares of major tech-related companies all advanced. The Dow and S&P 500 climbed 0.1% and 0.2%, respectively, while the Nasdaq Composite gained 0.6%. Microsoft, Facebook, Apple, Netflix and Alphabet all traded at least 0.4% higher. However, the market’s gains were kept in check amid lingering worries over spikes in coronavirus cases. —Imbert
Jefferies raised its price target on the education technology company to $80 from $55 and said its more “constructive on CHGG after an upbeat CEO meeting.” “Chegg is leaning into recent initiatives that have yielded better than expected results, such as international growth and account sharing prevention,” analyst Brent Thill said. “Bears will push back on valuation, but we are taking a long-term view and believe Chegg will remain at the forefront of educational transformation,” he said. The stock up over 1% in midday trading. —Bloom
The firm said the merchant services and mobile payment aggregator had several “underappreciated drivers” of the stock. “Data from SQ’s recent PPP originations update indicates that the resiliency of the merchant base may be stronger than investors fear,” Barclays analyst Ramey El-Assal said. The firm also noted that third-party data showed “continued improvement in small and medium-sized business sales.” Shares of Square are up over 6% in early trading. — Bloom
Existing homes sales fell 9.7% in May, compared with April, to a seasonally adjusted annualized rate of 3.91 million units, according to the National Association of Realtors. Sales were down 26.6% annually. That is the largest annual decline since 1982, when interest rates were about 18%. While the sales plummeted, Realtors expect this will represent the bottom of the slump in sales. — Fitzgerald, Olick
President Donald Trump’s top economic advisor, Larry Kudlow, said Monday that a second wave of the coronavirus “isn’t coming” and categorized recent upticks in new cases as isolated events in regional hot spots. His comments came after the U.S. reported more than 30,000 new infections on Friday and Saturday, the highest daily totals since May 1. Peter Navarro, one of Trump’s top trade advisors, said Sunday that the White House was, in fact, preparing for another wave of the disease. Kudlow also said Monday that House, Senate and White House leaders will likely have another stimulus package in the weeks following Congress’s July recess. — Franck
U.S. stocks have seemingly been able to bat away most negative news items in recent weeks, but Citi’s Tobias Levkovich warns this doesn’t mean the market is impervious to another downturn. “The notion that the market advance cannot falter because of corporate bond buying programs was shown to be inaccurate when the S&P 500 plunged” on June 11, said Levkovich. Despite its recent hiccup, the S&P 500 remains up more than 40% from its March 23 low amid unprecedented economic support from the Federal Reserve and U.S. lawmakers. “There is this persistent sense that nothing can derail equities, including possible second COVID infection waves, election concerns, China-India clashes, North Korean incitement or even disappointing economic data,” adds Citi’s chief U.S. equity strategist. “Hence, this Teflon market is letting no negative news stick … until it does.” —Imbert, Bloom
Wall Street firm B. Riley FBR said Vista Outdoor, a marketer of outdoor sports and recreation products, should see “continued firearms/ammo demand strength.” Analyst Eric Wold said the company will get a boost as the presidential election nears and consumers resume outdoor activities in the wake of the coronavirus. The firm raised its price target on the stock to a Street high $16 from $13. Shares are up over 1% in early trading. – Bloom
Shares of Virgin Galactic rose as much as 14% in early trading after the company announced it signed an agreement with NASA’s Johnson Space Center. The company will be able to train astronauts for trips to the International Space Station, as well as look to buy seats on flights to the ISS. – Sheetz
- Cowen raised its price target on Apple to $400 from $335.
- Stifel raised its price target on Peloton to $62 from $55.
- Wells Fargo upgraded Gap to overweight from underweight.
- UBS upgraded Walmart to buy from neutral.
- UBS downgraded American Express to sell from neutral.
- JPMorgan initiated Nikola as neutral.
- Barclays upgraded Marriott and Hilton to overweight from equal weight.
- Jefferies initiated DraftKings as buy.
- Jefferies upgraded Campbell Soup and Conagra to buy from hold.
- B. Riley FBR downgraded Foot Locker to neutral from buy.
- Benchmark upgraded Western Digital to buy from hold.
U.S. equities started the week in the red, as an uptick in cases of the coronavirus in the U.S. and abroad worried investors about the economy reopening successfully. The Dow Jones Industrial Average fell 75 points, or 0.35%. The S&P 500 was 0.26% lower. The technology-heavy Nasdaq Composite was flat, helped by gains in Microsoft and Apple. — Fitzgerald
Minutes before the opening bell, futures on the Dow Jones Industrial Average rose by 100 points, or 0.5%, but the 30-stock benchmark was set for an opening loss of about 100 points. The gap between the direction of futures and the “implied open” is partly due to futures expiration on Friday. S&P 500 futures and Nasdaq-100 futures gained 0.5% and 0.7%, respectively, implying a flat open for both indices. —Li
Cowen said Apple is primed for the 5G upgrade cycle when it begins later this year. “We are raising our iPhone shipment forecasts based on our latest field work and revising our P/E valuation multiples for the iPhone business ahead of the 5G upgrade cycle, and for the Services segment on expanding recurring revs and peer multiples,” analyst Krish Sankar said. “We remain bullish on Apple’s stock and view it as a defensive name with a stock multiple-enhancing Services segment that continues to benefit from the work from home & distance learning environment, & a cash flow generating iPhone business that should accelerate as we enter a 5G upgrade cycle,” he added. Shares are up 0.53% in premarket trading. —Bloom
Shares of Sherwin-Williams rose more than 2% during Monday’s premarket trading after the company increased its sales guidance for the current quarter. The company now expects net sales to decrease year-over-year by a mid-single digit percentage, compared with prior estimates of a low to mid-teens percentage drop. “We are raising our second quarter sales guidance given our ability to capture and serve greater than expected demand in our North American architectural businesses,” said chairman and CEO John Morikis. Shares of the paint producer have gained 41% in the last three months. – Stevens
Shares of popular consumer technology companies rose in premarket trading with Microsoft and Apple up 0.7% each. Investors have bought into the resilient technology shares over the last few months amid the coronavirus pandemic. E-commerce hub Amazon rose 0.5% before the opening bell while Zoom Video added 1.3%. Online payment companies Mastercard, PayPal and Visa gained about 1%, 0.7% and 0.35%, respectively. — Franck
Some big-name retail stocks rose in premarket trading Monday after being upgraded by Wall Street analysts. Gap jumped more than 5% after Wells Fargo upgraded the stock to overweight from underweight, saying the market undervalued the company’s Athleta brand and calling the stock “a compelling risk/reward.” Walmart rose 0.7% after being upgraded to buy from neutral by UBS. Other rising retailers include Dollar General and Bed Bath & Beyond. — Pound
Dow futures were up 150 points in early trading Monday, but the moves indicated an opening loss of about 60 points. The big gap between the direction of futures and the “implied open” is due to futures expiration on Friday, as well as recent market volatility. “The futures are trading a lot higher this morning, but that is very misleading…because they fell significantly on Friday between 4:00 (when the cash market closed) and 4:15 (when the futures closed),” Matt Maley, chief market strategist at Miller Tabak, said in a note. “Therefore, most of this morning’s bounce in the futures is merely taking back what it lost after the close of trading on Friday.” — Li
American Airlines announced on Sunday that it’s looking to secure $3.5 billion in new financing to improve its liquidity as it copes with travel restrictions introduced by the coronavirus. American plans to raise $1.5 billion through sales of equity and convertible notes due in 2025, the company said in a statement. Meanwhile, the airline said it will offer another $1.5 billion in senior secured notes and that it’s seeking a $500 million term loan facility due 2024.
American shares fell 8.5% in premarket trading, while United, Delta and Southwest dropped 4%, 2.6% and 2%, respectively. — Franck
Recent data show that coronavirus cases in the U.S. and abroad are increasing. The largest single-day increase in global coronavirus cases was recorded on Sunday, according to the World Health Organisation, after more than 183,000 new cases were reported worldwide. The U.S. saw more than 36,000 new cases reported on Sunday after more than 30,000 new cases were reported on both Friday and Saturday. Nevada, Florida, California and Arizona have reported record-high single-day infections as their economies attempt to open from the shutdown. Widespread testing is contributing to the uptick in reported cases. — Fitzgerald
Dow Jones Industrial Average futures were higher by about 100 points. S&P 500 futures and Nasdaq-100 futures were also slightly higher. Major U.S. stock averages are coming off their fourth weekly gains in five weeks. Gains were capped on recent upticks in new coronavirus cases. — Franck
— CNBC’s Jesse Pound and Pippa Stevens contributed reporting.
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Author: Thomas Franck,Maggie Fitzgerald,Yun Li