US FINANCIAL MARKET
U.S. Stocks Climb as Jobless Claims Trend Lower
- U.S. stocks rose Thursday as the number of new applicants for unemployment benefits continued to decline from a peak triggered by the coronavirus.
- Stock investors appear to be largely looking past the plunge in employment. U.S. equities rose on Thursday with the Nasdaq Composite Index briefly turning positive for the year, demonstrating the appeal of technology shares.
- Initial jobless claims for the week ended May 2 came in at 3.2 million, with total applications since mid-March surpassing 33 million.
- At the same time, fresh signs of a deterioration in relations between the U.S. and China are weighing on sentiment, with the two governments exchanging barbs as the coronavirus pandemic deepens the rancor.
- As earnings season continues, shares in Lyft rose 19% after the ride-hailing company’s first-quarter results Wednesday suggested that it was resilient to the worst of the pandemic.
- Uber Technologies, which will post results after markets close today, climbed 7.5%.
- Shares in PayPal Holdings gained 12% after the digital payments company reported a sharp increase in new active accounts Wednesday.
Daily Coronavirus-Case Count Surges
- The world recorded its highest daily number of new coronavirus cases in almost two weeks, even as the U.S. and a host of other nations relax restrictions that kept businesses closed and people off the streets.
- New confirmed infections on Wednesday topped 92,700, the most since April 24 and the fourth-highest daily total ever, according to data compiled by Johns Hopkins University.
- The U.S. accounted for more than a quarter of them, around 24,300—an elevated number but much lower than the 36,000 one-day peak it logged in April.
- Other countries reporting daily totals of more than 10,000 included Russia and Brazil, whose outbreaks had seemed mild at first but where the spread of the virus has accelerated sharply.
- The surge pushed the total number of confirmed coronavirus cases world-wide past 3.77 million, around a third of them in the U.S., according to the Johns Hopkins database.
- The global death toll stands at more than 264,000, led by the U.S., with more than 73,000 reported fatalities.
Lyft sees rider demand improve in late April, ‘on path to profitability’
- Lyft on Wednesday posted higher-than-expected revenue and the ride-hailing company vowed further cost cuts to become profitable, saying ridership hit by the coronavirus pandemic had improved in late April.
- First-quarter revenue rose by 23% to $955.7 million from the previous year, well ahead of a $884.7 million estimate by Refinitiv.
- The company’s active ridership base increased by 3% compared to a year ago to 21.2 million, but was down sequentially, while revenue per active rider increased by 19%.
- The company’s net loss improved to $398 million, compared to a loss of $1.14 billion in the same period a year ago.
- For April, rides were down 75% year over year but Chief Executive Logan Green said Lyft saw moderate week-on-week growth in ride requests starting in mid-April.
- In the United States, rides rose 21% in the first week of May compared with a low point on April 12.
- Based on April volumes, Lyft expects a second-quarter loss of less than $360 million on an EBIT basis.
PayPal Soars With Focus on Latest Trends
- Shares of PayPal rallied as much as 13%, reaching a record high in early trading on Thursday, with analysts zeroing in on the payments company’s strong April trends and growth in electronic transactions across the board.
- Revenue rose 12% to $4.62 billion in the quarter, compared with the $4.72 billion analysts estimated.
- PayPal processed $191 billion in payments in the first quarter, up 18% from a year earlier, but missed estimates of $194.23 billion.
- The company reported “unprecedented” use of its platform over the past month, adding a record 7.4 million net new customers for the month of April.
- Transaction and credit losses were $591 million in the period, versus $341 million in the first quarter of 2019.
- Net income fell to $84 million in the quarter, from $667 million a year earlier.
- PayPal said it sees sales growth of about 13% in the current period and an increase of as much 20% in adjusted earnings per share. Wall Street had been forecasting a revenue increase of 7% and a 2% bump in profit.
- PayPal withdrew its full-year revenue and earnings forecasts.
Square Sees ‘Significant Slowdown,’ Quadruples Loss Reserves
- Square said it quadrupled the money it sets aside to cover loan losses after the coronavirus pandemic and the economic crisis sparked a steep drop-off in parts of its business.
- Revenue grew 44% to $1.38 billion in the first quarter, topping analyst estimates.
- The company said gross payment volume, the total amount of all card payments processed by Square sellers, was $25.7 billion compared to analysts’ estimates of $26 billion.
- Transaction and loan losses were $109 million, a 291% increase from the year earlier.
- The company said that included additional reserves of $79 million for transaction losses and $22 million for outstanding loans in its Square Capital business — a fourfold increase compared to the fourth quarter.
- The company’s loss for the quarter totaled $106 million. Analysts had estimated losses of only about $34 million.
Raytheon Technologies Defends Merger Rationale
- Raytheon Technologies on Thursday said the rationale for its creation remained intact even as the coronavirus-driven crisis that has engulfed the global airline industry drove cost-cutting efforts and threatened future sales.
- Overall sales at the company fell 1% to $18.2 billion, including Otis and Carrier, with flat organic sales.
- The legacy Raytheon defense unit reported a 6.5% rise in sales during the quarter while its Collins Aerospace unit had a 1% drop in revenue. Sales at Pratt & Whitney rose 11%.
- Raytheon Technologies reported a first-quarter loss of $83 million compared with a profit of $1.35 billion a year earlier.
- The results include the contribution of the Otis elevator and Carrier commercial heating and ventilation units that were spun off before its creation.
- The company has withdrawn full-year guidance.
Fox quarterly revenue tops estimates as Super Bowl boosts viewership
- Fox beat estimates for third-quarter revenue and profit on Wednesday as Super Bowl broadcast boosted television viewership.
- Total revenue rose 25% to $3.44 billion from $2.75 billion, above analysts’ average estimate of $3.33 billion.
- Cable-network programming revenue rose 6.1% to $1.47 billion.
- Television revenue rose 41% from a year ago to $1.93 billion, due to increases in affiliate revenue from programming fees for third-party Fox affiliates and higher average rates per subscriber.
- However, the company said it saw a drop in subscribers in the quarter.
- Net income fell to $78 million in the quarter, from $529 million a year earlier.
NCAA Tournament Cancellation Hurts Revenue at ViacomCBS
- ViacomCBS reported a drop in revenue in the first quarter, driven by weak ad sales, but its streaming business grew and the company came in ahead of Wall Street’s expectations.
- The company said it generated $6.67 billion in revenue, more than analyst expectations of $6.62 billion, but a drop of over 6% compared with the year-earlier period.
- Advertising revenue fell 19% hurt by the year-earlier quarter including the Super Bowl and the NCAA basketball tournament.
- The media company said profit was $516 million, down from $1.96 billion a year earlier. The company’s results a year earlier included a $549 million gain on selling CBS Television City, ViacomCBS said.
- ViacomCBS shares rose as much as 16% on a surge in streaming subscriptions among homebound viewers during the coronavirus pandemic, along with a new distribution deal with YouTube.
- The New York company said its two paid services, CBS All Access and Showtime OTT, delivered record subscribers, sign-ups and consumption, with subscribers surpassing 13.5 million, up 50% year-over-year.
- Its free streaming service, Pluto TV, saw monthly active users grow to 24 million.
- While ViacomCBS’s quarterly profit beat analysts’ estimates, investors are also likely celebrating a new distribution deal the company announced Thursday morning with Alphabet’s YouTube TV.
- The agreement adds 14 of its channels to YouTube’s online TV service, which has more than 2 million subscribers.
- Still, Covid-19 spoiled the party for ViacomCBS’s first full quarter as a combined company.
- Revenue declined, driven by a 19% drop in advertising sales.
Dish loses more pay TV subscribers in first quarter
- U.S. satellite TV provider Dish lost more than 250,000 pay TV subscribers in the first quarter as it offered waivers and paused some services for customers in the hospitality and airline sectors, which have come to a standstill due to travel curbs.
- Total revenue for the company rose to $3.22 billion in the quarter from $3.19 billion, beating estimates of $3.15 billion.
- Dish’s pay TV unit, which includes its Sling TV streaming service, lost net 413,000 subscribers compared with a net loss of 259,000 subscribers a year earlier.
- Net income fell to $73.1 million, from $339.8 million.
Peloton raises revenue forecast as people turn to home workouts in lockdowns
- Peloton Interactive raised its forecast for full-year revenue on Wednesday as “stay at home” orders encouraged more people to buy the company’s exercise bikes and fitness subscriptions plans.
- In the fiscal third quarter, revenue surged 65.6% to $524.6 million, handily beating analysts’ estimates of $487.7 million.
- Sales from its connected fitness products such as its bikes totaled $420.2 million, up 61% from a year ago and representing 80% of total revenue, while subscription revenue totaled $98.2 million, up 92% year-over-year and making up 19% of total revenue.
- Net loss widened to $55.6 million in the quarter, from $38.6 million a year earlier.
- Peloton now expects fiscal year revenue of $1.72 to $1.74 billion, compared with an earlier forecast of $1.53 to $1.55 billion.
- The company also raised its outlook for Connected Fitness subscribers for the year to 1.04 to 1.05 million, from 920,000 to 930,000.
- Peloton forecast fourth-quarter revenue of $500 to $520 million, well above estimates of $383.26 million.
GrubHub’s Sales Improve as Customers Reach for Delivery
- GrubHub said delivery sales have rebounded after a drop at the start of the coronavirus pandemic when customers stocked up on groceries rather than restaurant food.
- Sales in the first quarter totaled $363 million, up 12% from a year earlier and beating analyst expectations of $358.1 million.
- Active diners during the quarter ending March 31 surged 24% from last year’s period to 24 million.
- GrubHub posted a loss of $33.4 million in the quarter, compared to a profit of $6.9 million in the same period a year ago.
- New York City restaurants listed on its platform that held deals with the company dropped by almost half by early-April.
T-Mobile beats phone subscriber estimates as lockdown creates demand surge
- T-Mobile added more monthly bill paying phone subscribers than expected in the first quarter, thanks to a surge in demand for cheaper phone services as people work from home amid lockdowns.
- The company posted a marginal rise in revenue to $11.1 billion from a year earlier, but missed expectations of $11.4 billion.
- It added 452,000 net new monthly paying phone subscribers in the first quarter, above analysts’ estimates of 426,000.
- The carrier had 68.5 million connections at the end of March.
- Net income rose to $951 million from $908 million a year earlier.
- The company said it was expanding its 5G rollout as demand continues to rise during the lockdowns.
- T-Mobile expects to add up to 150,000 net monthly phone subscribers in the second quarter.
- The company said that its merger-related costs would range from $500 million to $600 million before taxes and its COVID-19 pandemic-related costs would be between $450 million to $550 million before taxes.
Spirit AeroSystems says coronavirus worsened its cash flow outlook
- Aircraft parts maker Spirit AeroSystems said on Wednesday that its cash flow outlook for the year had worsened as top customers Boeing and Airbus cut production due to the COVID-19 pandemic.
- Spirit’s revenue plunged 45% to $1.08 billion in the first quarter ended April 2.
- Spirit said it now expects to deliver only 125 737 MAX shipsets – a complete set of parts for each aircraft – to Boeing in 2020, down from 216 it had planned earlier in the year, hurting its revenue and cash flow.
- The company reported a loss of $163 million in the quarter, compared with a profit of $163 million a year earlier.
- Spirit said it will book additional losses of $70 million to $90 million in the second quarter related to a further reduction in 787 Dreamliner production by Boeing.
- Spirit said it will also record a loss of $15 million to $20 million in the current quarter related to the Airbus A350 aircraft.
‘Empires & Puzzles’ powers Zynga’s quarterly beat, lockdowns lift forecast
- Zynga raised its full-year forecast on Wednesday after topping analysts’ estimates for quarterly bookings, as users spent more time playing games like “Empires & Puzzles” while sheltering at home amid the COVID-19 pandemic.
- Total quarterly revenue rose 52% to $403.8 million, falling short of analysts’ expectation of $406.7 million.
- Zynga, which also makes money through advertisements on its free-to-play games, said user pay bookings rose 24% to $366 million from an earlier year, partially offsetting a 9% decline in ad sales.
- The company reported a smaller quarterly net loss of $103.9 million, from $128.8 million a year earlier.
- The developer raised its full-year bookings forecast to $1.8 billion from $1.75 billion, above estimates of $1.76 billion.
Wynn Resorts Details Coronavirus Damage
- Las Vegas-based Wynn Resorts reported a net loss and a sharp drop in revenue, the latest casino operator to reveal how coronavirus shutdowns are hurting the gambling industry.
- Wynn Resorts said operating revenue declined 42% to nearly $954 million, down from $1.65 billion a year earlier.
- The company had a net loss of $402 million for the quarter, compared with net income of nearly $105 million a year earlier.
- The company also said it has suspended its quarterly dividend because of the impact of the pandemic, preserving over $100 million of liquidity per quarter.
Hyatt Posts Quarterly Loss with Pandemic Keeping Travelers Home
- Hyatt Hotels swung to a loss as cratering travel demand hammered the hotel chain.
- The hotel operator posted revenue of $993 million in the period, beating Street forecasts of $942.3 million.
- Revenue per available room, which combines pricing and occupancy, decreased 28% in the quarter — a steep fall considering that travel restrictions didn’t take full effect in most of the world until March.
- Hyatt reported a first-quarter loss of $103 million, after reporting a profit in the same period a year earlier.
IAC revenue rises as home-bound take to online dating, video streaming
- IAC/InterActiveCorp reported an 11% rise in quarterly revenue as its online dating business and video hosting platform added more stuck-at-home users.
- Revenue for the digital media company rose 11% to $1.23 billion, marginally above analysts’ estimates of $1.20 billion.
- IAC signaled a spike in demand for Vimeo’s video tools in the quarter as more people shift to working and learning remotely.
- Revenue at this unit rose 31% to $57 million, above estimates of $54.5 million.
- Surge in users in these units partially offset a drop in demand in its homeservices platform ANGI, which reported quarterly revenue of $343.6 million, missing estimates of $345.8 million.
- Net loss was $211 million for the quarter, compared with a profit of $88.7 million a year earlier.
Twilio skyrockets as quarterly results fly past estimates
- Twilio shares were up as much as 25% in extended trading on Wednesday after the company reported first-quarter results and quarterly guidance that surpassed analysts’ estimates. The company’s shares exceeded the $149.95 record close from July 2019.
- Revenue grew 57% on an annualized basis to $364.9 million. Analysts had expected $331.25 million.
- Twilio reported over 190,000 active customer accounts at the end of the quarter, while analysts had expected 185,595.
- The company posted a larger loss of $94.79 million, compared to a loss of $36.5 million in the same period a year ago.
- For the second quarter, Twilio’s forecast called for a loss of between 11 and 8 cents per share on an adjusted basis, and $367 million to $370 million in revenue. Analysts had been looking for an adjusted loss of 13 cents on $336.9 million in revenue.
Bristol Myers sees 2020 earnings holding despite coronavirus pandemic
- Bristol Myers Squibb on Thursday reported better-than-expected first-quarter results, and said it still expects 2020 earnings within its previously forecast range despite the coronavirus pandemic that has savaged economies worldwide.
- Bristol said it had revenue of $10.8 billion. Analysts, on average, had expected sales of $10.02 billion.
- Sales of its blockbuster blood thinner Eliquis, which the company shares with Pfizer, were particularly strong, rising 37% from a year ago to $2.6 billion. Analysts had forecast sales of around $2.2 billion in the quarter.
- The company posted a first-quarter net loss of $775 million.
- It said it still expects full-year earnings of $6 to $6.20 a share. It lowered its 2020 revenue forecast to $40 billion to $42 billion, shaving $500 million from both the top and bottom ends of the range. Analysts, on average, had forecast revenue of $41.6 billion.
Budweiser Brewer Hit by Pandemic, but Sees Bright Spots in U.S., China
- Anheuser-Busch InBev, the world’s largest beer maker, forecast a “materially worse” second quarter as coronavirus restrictions curb drinking across the globe, although China was showing early signs of recovery.
- Revenue fell 5.8% on an organic basis to $11 billion, lower than the 5.4% drop analysts had expected.
- In the U.S., AB InBev said net sales grew 1.9% but its brands’ overall market share dropped by 50 basis points in the quarter.
- The brewer’s global volumes dropped by 32% in April, a far steeper decline than the 9.3% drop it reported for the first quarter.
- Overall, for the quarter, the brewer swung to a loss of $2.25 billion compared with a profit of $3.57 billion a year earlier.
- The company said the decline in China is slowing. Volumes in April were down just 17% from the previous April. That compares with a first-quarter decline of 46.5% from the year-earlier quarter.
MGM Resorts Warns 63,000 Workers of Possible Layoffs
- MGM Resorts said some of its 63,000 furloughed workers could be laid off starting Aug. 31 amid a murky outlook for the closed U.S. casino industry.
- In a letter to furloughed employees Tuesday, MGM Resorts Acting Chief Executive Bill Hornbuckle said demand for travel would be significantly decreased through the end of this year and possibly into the next because of the coronavirus pandemic.
- The company had hoped operations would bounce back by this summer, he said.
- MGM Resorts, the biggest operator on the Las Vegas Strip, with about a dozen properties, has said its relaunch would be gradual and based on demand whenever casinos are cleared to reopen.
U.S. demand for cars expected to rebound while travel, dining lag: ad agency
- Consumer demand for cars could begin to recover this month in the United States after steep declines due to the coronavirus pandemic, but the hard-hit travel and dining industries will likely continue to face difficult times.
- Demand for cars could rise to 80% of pre-pandemic levels by the end of this month, according to Universal McCann, a unit of advertising holding company Interpublic Group.
- On the other hand, there are not yet any signs of recovery on the horizon for the travel industry, which has been particularly hit hard by the pandemic, Universal McCann said.
- Similarly, demand for dining out is expected to recover just 20% by June, from its low levels in April.
- Food delivery is one bright spot, with a doubling of demand between mid to late-March, and will likely continue to see high demand, the agency forecast.
- But sales of consumer electronics, which peaked in March and April as people looked for entertainment, are expected to drop back down to pre-pandemic levels by the end of this month.
US ECONOMY & POLITICS
3.2 Million Workers Filed for Jobless Benefits Last Week
- Initial jobless claims for state unemployment benefits totaled a seasonally adjusted 3.169 million for the week ended May 2.
- Data for the prior week was revised to show 7,000 more applications received than previously reported, taking the tally for that period to 3.846 million.
- It was the fifth straight weekly decrease in applications since the record 6.867 million in the week ended March 28.
- Still, the latest numbers lifted to about 33.5 million the number of people who have filed claims for unemployment benefits since March 21, roughly 22.1% of the working-age population.
- The claims report also showed the number of people receiving benefits after an initial week of aid surged 4.636 million to a record 22.647 million in the week ended April 25.
- In another report on Thursday, the Labor Department said nonfarm productivity, which measures hourly output per worker, decreased at a 2.5% annualized rate in the first quarter.
- That was the largest decline since the fourth quarter of 2015 and followed a 1.2% pace of increase in the fourth quarter.
- Hours worked tumbled at a 3.8% rate last quarter, the sharpest decline since the third quarter of 2009.
- Hours worked increased at a 1.2% rate in the fourth quarter.
House Democrats Close in on New Stimulus Proposal
- House Democrats are putting the finishing touches on their next legislative response to the coronavirus pandemic, a package that will propose another massive round of aid just as President Trump and Senate Republicans are urging caution on quickly passing new spending.
- The bill being drafted by Democratic leadership is expected to include more than $750 billion in aid to state and local governments, as well as another round of direct support to Americans, according to interviews with lawmakers and aides.
- Senate Majority Leader Mitch McConnell (R., Ky.) has taken a wait-and-see approach on new funding, after Congress passed more than $3 trillion in aid in a matter of months, responding to deep layoffs across the economy.
- He has called liability protections for businesses his central demand in new talks which Democrats have so far resisted.
- Meanwhile, Mr. Trump is seeking payroll-tax cuts and other tax relief, an idea panned by members of both parties in Congress.
EUROPE & WORLD
China Counters Coronavirus Crunch with a Surprise Rise in Exports
- Chinese exports rose unexpectedly in April, bucking a pandemic-induced economic slump that has crimped demand and disrupted supply chains world-wide.
- China’s outbound shipments rose 3.5% in April compared with a year earlier, compared with the 6.6% year-over-year decline in March, data from the General Administration of Customs showed Thursday.
- Chinese imports, meantime, fell 14.2% last month, far sharper than March’s 0.9% drop and the biggest decline since February 2016, indicating rapidly weakening demand at home.
- The unexpected surge in exports and drop in imports helped China’s trade surplus balloon to $45.34 billion last month, compared with a $19.9 billion surplus in March.
Nintendo smashes Switch sales view; says Animal Crossing is device’s fastest-selling game
- Japan’s Nintendo said on Thursday its fourth-quarter profit soared 200% due to surging demand for its Switch games console, and that title Animal Crossing: New Horizons shifted a record 13.4 million units in its first six weeks.
- In the year ended March, Nintendo sold 21 million Switch consoles, well above its forecast of 19.5 million.
- That breaks down as 14.8 million units of the hybrid home-portable device and 6.2 million units of the handheld-only Switch Lite, which went on sale in September.
- The gaming company posted operating profit of 89.4 billion yen for January-March, smashing analyst estimates.
- Nintendo said it expects to sell 19 million Switch console units in the current financial year. Its forecasts are widely viewed as conservative.
Air France-KLM loss gives first taste of coronavirus impact
- Two weeks of coronavirus shutdown were enough to hit Air France-KLM with an 815 million-euro ($880 million) first-quarter operating loss, the airline group said on Thursday – predicting demand could take “several years” to recover.
- Air France-KLM’s revenue fell 15.5% to 5.02 billion euros in the first quarter.
- Its net loss widened to 1.8 billion euros from 324 million, also swollen by a 455 million-euro impact from over-hedged fuel.
- Air France-KLM expects to reduce monthly cash burn to 400 million euros in the second quarter thanks to cost-cutting and state-funded furloughs that save 350 million euros a month.
- But operating losses will widen “significantly” in April-June with 95% of flights expected to remain grounded by a combination of travel restrictions designed to contain the pandemic and collapsed demand.
- Formally withdrawing its pre-crisis 2020 guidance, Air France-KLM said it plans to reduce its aircraft fleet by 20% in 2021.
Puma limbers up for exercise-driven recovery
- Puma expects its second-quarter results will be worse than the first as so many stores are closed in coronavirus lockdowns, but the German sportswear firm is optimistic sales will bounce back as the crisis has led more people to exercise.
- First-quarter sales fell a currency-adjusted 1.3% to 1.3 billion euros ($1.4 billion), while operating earnings dropped 50% to 71.2 million euros, compared with mean analyst forecasts for 1.26 billion and 74 million respectively.
- Puma sales fell 12% in the Asia-Pacific region in the first quarter, but still managed to grow 3.5% in Europe, Middle East and Africa and by 3.1% in the Americas as coronavirus lockdowns only started there in March.
Continental’s profit almost halves as lockdowns hit car production
- Auto parts supplier Continental will deepen cost cuts after its operating profit almost halved in the first quarter as coronavirus lockdowns caused global car production to fall 25%, the company said on Thursday.
- The German manufacturer’s earnings before interest and taxes dropped 47% to 436.5 million euros ($471 million) in the first quarter of 2020 from 823.3 million a year earlier and its operating margin narrowed to 4.4% from 7.5%.
- Continental warned its second-quarter results would be worse as lockdown measures hit large markets including the United States. As a result, it will aim to cut investment by 20%, following a 26% fall in the first quarter.”
TODAY in HISTORY
- Beethoven’s 9th Symphony premiered in Vienna. (1824)
- Germany unconditionally surrendered to the allies in Rheims, France. (1945)
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, the Wall Street Journal.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.