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S&P 500, Dow Slip on Fear of New Infection Wave





S&P 500, Dow Slip on Fear of New Infection Wave

  • The S&P 500 and Dow Jones indexes retreated on Monday after last week’s rally, as investors worried about a second wave of coronavirus infections with the reopening of several economies.
  • Germany and South Korea reported a surge in new COVID-19 cases on Sunday, in an ominous sign for all countries beginning to lift virus lockdowns.
  • South Korea is serving as a cautionary tale for investors, after the biggest one-day increase in new infections in a month prompted the government to warn that the nation must brace for a second wave.
  • Meanwhile, British Prime Minister Boris Johnson is joining authorities in Germany and some U.S. states in easing restrictions.
  • On Sunday, Mr. Johnson laid out a three-step plan to ease the U.K. lockdown measures, including allowing staff in the construction and manufacturing industries to return to work as early as Monday.
  • Athletic apparel maker Under Armour slumped 11.6% after reporting its quarterly revenue fell by 23%, while General Mills rose 1.5% after it said it expects to surpass its own expectations for fiscal 2020 organic sales.
  • Marriott International shed 5.9% after the hotel operator’s quarterly profit fell short of already drastically lowered expectations as bookings plunged.

U.S. Coronavirus Deaths Near 80,000 as States Expand Moves to Reopen

  • As the U.S. death toll from the coronavirus pandemic approached 80,000, senior White House officials over the weekend urged state governors to take steps toward restarting commerce as the economic wreckage mounted from lockdowns.
  • In California, Gov. Gavin Newsom said roughly 70% of the economy could reopen with restrictions as the state progressed to its second phase of activity—though several counties in the hard-hit Bay Area would still be under lockdown.
  • South Korea, which had earlier appeared to tame the spread, reported 35 new cases, its biggest single-day rise since April 9, amid a wave of new cases related to clubs and bars in a popular Seoul neighborhood.
  • India on Monday reported 4,213 new cases—a record daily high—even as the nation of more than 1.3 billion people took steps to reopen its economy after a massive lockdown that started in March.
  • In another medical mystery of Covid-19, some patients are arriving at hospital emergency rooms with so little oxygen in their blood that they should be on the brink of organ failure. Instead, these patients aren’t only conscious but also talkative and in decent spirits.
  • Their existence has prompted some doctors to delay the use of intubation and ventilators normally indicated by such low blood oxygen levels, and opt for less invasive measures to boost oxygen levels such as high-flow nasal cannulas.

FDA Grants Emergency-Use Status for First Coronavirus Antigen Test

  • The Food and Drug Administration has granted emergency-use authorization to Quidel for the first antigen test for the Covid-19 virus—a step that could escalate the nation’s ability to test for the disease.
  • An antigen test can detect the disease itself by discovering the foreign toxin that is prompting the body to create antibodies.
  • The FDA also noted that these antigen tests can normally be produced at lower prices than PCR tests and “can potentially scale to test millions of Americans a day due to their simpler design, helping our country better identify infection rates closer to real time.”
  • The U.S. currently is running tests at a rate under half of the optimal level needed to be sure that the public is safe to go back to work and resume other activities, according to many public-health experts.

Marriott Posts Lower Profit as Occupancy Drops Amid Coronavirus

  • U.S. hotel operator Marriott missed already lowered estimates for first-quarter profit by a huge margin on Monday, as bookings plunged due to coronavirus-led lockdowns that kept a quarter of its hotels closed.
  • Revenue slumped 7% to $4.68 billion. Analysts on average had expected revenue $4.03 billion.
  • For the first quarter, Marriott reported a 22.5% decline from a year earlier in revenue per available room to $84.51.
  • Net income fell to $31 million from $375 million a year earlier.
  • Chief Executive Officer Arne Sorenson said occupancy at Marriott hotels in Greater China reached 25% in April, up from less than 10% in mid-February 2020, and said that was evidence of the resilience of travel demand.

General Mills sees sales bump from surge in stay-at-home orders

  • General Mills said on Monday it expects to surpass its own expectations for fiscal 2020 organic sales, as people stock their pantries with breakfast cereals and other long-lasting packaged food amid lockdowns.
  • The company also said it expects fourth-quarter organic net sales to increase by double-digits percentage, powered by strong growth in its North America retail and pet segments in March and April.
  • It expects to exceed its previous forecast ranges of 1% to 2 % organic net sales growth, 4% to 6% rise in adjusted operating profit, and 6% to 8% growth in adjusted profit for fiscal 2020.

Under Armour’s quarterly revenue slumps on lockdowns hit

  • Under Armour reported a 23% fall in quarterly revenue, as retailers across the world remained shut due to the pandemic.
  • Net revenue fell to $930.2 million from $1.20 billion, below the $949 million figure forecast by analysts.
  • In North America, its biggest segment which made up for about 65% of total sales in the quarter, revenue slumped 28% to $609 million, while international sales fell 12% to $287 million.
  • Under Armour reported a net loss of $589.7 million, compared with a profit of $22.5 million a year earlier.

Trump and Chip Makers Including Intel Seek Semiconductor Self-Sufficiency

  • The Trump administration and semiconductor companies are looking to jump-start development of new chip factories in the U.S. as concern grows about reliance on Asia as a source of critical technology.
  • Administration officials say they are particularly concerned about reliance on Taiwan, the self-governing island China claims as its own, and the home of Taiwan Semiconductor Manufacturing, the world’s largest contract chip manufacturer and one of only three companies capable of making the fastest, most-cutting-edge chips.
  • Trump administration officials are in talks with Intel, and with TSMC, to build factories in the U.S., according to correspondence viewed by The Wall Street Journal and people familiar with the discussions.
  • TSMC has been talking to officials at the Commerce and Defense departments as well as to Apple, about building a chip factory in the U.S., said people familiar with the conversations.
  • Some U.S. officials are also interested in trying to help Samsung Electronics, which already operates a chip factory in Austin, Texas, to expand its contract-manufacturing operations in the U.S. to produce more advanced chips.
  • Among foundries that make chips on contract for other companies, only TSMC in Taiwan and Samsung in South Korea make chips at 10 nanometers or lower.

Tesla Files Lawsuit in Bid to Reopen Fremont Factory

  • Tesla has asked a federal judge to allow the electric-car maker to reopen its lone U.S. assembly factory, calling a local government’s insistence that it remain closed to fight the spread of Covid-19 a power grab that defies the U.S. Constitution.
  • The company filed its suit seeking an injunction against the county’s order and arguing, in part, that the local government had overstepped its authority by overruling the California governor’s approval for businesses to reopen.
  • In the lawsuit, Tesla said that its facilities in Lathrop, which is part of nearby San Joaquin County, continue to operate, saying both counties have experienced a similar infection and death rate. “This disparate treatment is arbitrary and without a rational basis,” the lawsuit said.

Oil Prices Swing After Saudi Arabia Deepens Supply Cuts

  • Oil prices swung between gains and losses Monday, pausing a recent rebound after Saudi Arabia said it would deepen its supply cuts to support beleaguered energy markets.
  • The swings came after the Saudi news agency said in a statement that the kingdom will lower its June oil supply to 7.5 million barrels a day, adding another 1 million barrels a day to its existing production cuts.
  • The move follows last month’s agreement to a coordinated global supply cut after a March feud between Saudi Arabia and Russia raised oil production while demand crashed.

TV Cord-Cutting Hits Record as Coronavirus Shuts Businesses

  • The largest cable and satellite TV companies lost more than two million customers in the first three months of the year, the industry’s sharpest quarterly decline on record, as restaurants, bars and hotels hit by the coronavirus pandemic joined consumers canceling or pausing service.
  • Cable and satellite companies warned in recent weeks that the pace of “cord-cutting” could pick up as the pandemic pinches U.S. households, particularly if U.S. live sports—one of the biggest draws of cable—don’t return to action for a long time.
  • Before the pandemic, those TV distributors were already being squeezed as more households shifted to streaming services such as Netflix,’s Prime Video and Walt Disney’s Disney+ and Hulu.

Shanghai Disneyland Reopens with the Magic of Social Distancing

  • Shanghai Disneyland welcomed visitors for the first time since January, becoming one of the highest profile tourist spots to reopen as China reboots parts of its economy that were shut down by the coronavirus.
  • Under the new system, visitors must wear a face mask, check their temperatures and present a government-issued QR code showing their recent travel history.
  • Visitor numbers were capped, some attractions remained closed and the day featured none of the hallmarks for which the Disney parks are known: parades, fireworks and meet-and-greets with familiar characters.

Stage Stores Files for Bankruptcy, Seeks Buyer as It Sells Off Inventory

  • Stage Stores said it has filed for bankruptcy, with a plan to start liquidating its inventory as the discount retailer reopens its stores, while at the same time searching for prospective buyers.
  • The department store had been preparing for a potential bankruptcy in the months before the coronavirus pandemic forced most U.S. retailers to close their doors in March.
  • The company is the latest retailer to file for bankruptcy since the pandemic began, following J.Crew and Neiman Marcus, which both entered court protection last week.


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Chinese advisers call for talks on new trade deal with U.S.: Global Times

  • Hawkish voices have emerged in China seeking a reevaluation of its Phase 1 trade deal with the United States, with some advisers urging fresh talks, a state-controlled tabloid said, citing sources close to the Chinese government.
  • Advisers close to the talks have suggested that Chinese officials revive the possibility of invalidating the trade pact and negotiate a new one to tilt the scales more to the Chinese side, the Global Times reported on Monday, citing the sources.
  • U.S. President Donald Trump said last week that he was “very torn” about whether to end the so-called Phase 1 trade deal, just hours after top trade officials from both countries pledged to press ahead with implementing the agreement.

Democrats Push Ahead with Coronavirus Plan Amid Break in Talks

  • House Democrats are pushing to complete their next coronavirus-aid proposal this week in the face of deepening economic gloom, but talks with the White House and the Republican-controlled Senate are on ice over disagreements over the pace and content of the next package.
  • It is expected to include more than $750 billion in aid to state and local governments, as well as direct support to Americans, according to lawmakers and aides.
  • Even if the House passes legislation, Democratic leaders aren’t currently in negotiations with the GOP Senate, where Majority Leader Mitch McConnell has called for a pause on new aid and has been cool to the idea of more money for states and cities.
  • In the next round of talks, he is prioritizing a liability shield for businesses operating during the pandemic, calling it Republicans’ must-have “red line.”

Over 80% of U.S. small businesses expect longer impact of pandemic: survey

  • Eighty-one percent of small U.S. companies surveyed by Veem, a global payments network, expect the new coronavirus pandemic to affect their business over the next 12-16 months, and nearly 90% are bracing for an economic slowdown.
  • Of the 690 firms surveyed, 65% said they had either submitted an application for the federal aid or planned to do so in the near future, Veem said in its first report on the sentiment among small to mid-sized businesses.
  • Nearly 70% of the companies surveyed cited some uncertainty about the U.S. economy in 2020, and 55% said they had already experienced some significant impact to revenue.
  • Nearly 54% of the companies said they were freezing hiring and 23% were downsizing staff, but nearly 18% said they planned to increase staff training and support.
  • Nearly one-quarter of the companies were investing in new technology or aligning their information technology systems.

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Toshiba sees FY2019 profit roughly in line with forecast, limited virus impact

  • Toshiba said on Monday it expects operating profit for the year ended March to more than triple, as the Japanese industrial conglomerate sees a limited impact from the coronavirus outbreak on its earnings for the financial year.
  • It forecast a profit of more than 130 billion yen ($1.2 billion), roughly in line with the previously estimated 140 billion yen.
  • The outbreak is likely to have reduced revenue by about 40 billion yen and profit by about 20 billion yen, it added.

South Korea’s Early Coronavirus Wins Dim After Rash of New Cases

  • South Korea, which largely succeeded in quelling the initial spread of the coronavirus, is back on the defensive, with Seoul’s bars and clubs ordered closed, as the country reported its biggest one-day increase in new infections in a month.
  • More than 50 cases have been linked to a 29-year-old man who, in a single night last weekend, visited five clubs and bars in a popular Seoul neighborhood, health officials said.
  • On Saturday, Seoul Mayor Park Won-soon issued an administrative order, lasting at least a month, banning large crowds at clubs, bars and other entertainment venues.

China Fires Official After New Coronavirus Cases Emerge in Wuhan Community

  • Authorities in Wuhan fired a local official after six new Covid-19 cases were confirmed over the weekend in a housing complex under his jurisdiction, in a sign of the government’s anxieties about the possibility of a resurgence in the original center of the pandemic.
  • The new cases in Wuhan were discovered after more than 5,000 residents in and around one community on Monday had completed nucleic acid tests, or detection of the virus via nose or throat mucus samples, according to the official Xinhua News Agency. They are the first new cases recorded in Wuhan in roughly a month.
  • Five of the patients discovered in the Sanmin community were asymptomatic, according to the Wuhan health commission.

China Auto Sales Snap Long Falling Streak, but Growth May Be Short-Lived

  • China’s auto market grew in April, overcoming an early-year collapse triggered by the coronavirus shutdown and ending a 21-month streak of declines that has shaken the world’s largest auto market.
  • Sales last month grew 4.4% from a year earlier to 2.07 million vehicles, the government-backed China Association of Automobile Manufacturers said Monday.
  • The April numbers got a boost from commercial vehicles such as trucks and buses, whose sales were up 32% in April, hitting a record. Meanwhile, passenger-car sales were down 2.6%.
  • The auto manufacturers association said it expects sales for the year to be down 15% to 25%, depending on how quickly the global pandemic can be brought under control.

The Coronavirus Sees China’s Local Governments Binge on Off-the-Books Debt

  • China’s regional bosses are ramping up infrastructure spending, falling back on an old remedy to boost economic activity as the coronavirus pandemic curbs consumption and industrial production.
  • These vehicles—known to investors as local government financing vehicles or LGFVs—raised 1.46 trillion yuan ($206 billion) in January to April this year, according to S&P Global Ratings.
  • That is the busiest start to the year in the rating company’s records, which go back to 2005.

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  • IBM’s supercomputer, Deep Blue defeated Garry Kasparov, the reigning world champion, in a six game chess match (2 for blue, 1 for Kasparov, and 3 ties). (1997)
  • India set off atomic blasts. (1998)

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