After Hours Summary: ADBE +2.7% up on earnings, but LULU -7.2%, PVH -5.2% fall on earningsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: ADBE +2.7%
Companies trading higher in after hours in reaction to news: RWT +18.4% (lowers dividend), SELB +7% (enters into a strategic licensing agreement with Sobi), VIE +6.6% (FDA approves Uplizna for NMOSD in adult patients with a particular antibody), JBLU +3.8% (Moody's downgrades senior secured ratings to Ba2), TGI +1.8% (files for $600 mln mixed securities shelf offering), LMT +1.6% (awarded $370 mln Navy contract)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: LULU -7.2%, PVH -5.2%, PLAY -0.3%
Closing Stock Market SummaryThe S&P 500 dropped 5.9% on Thursday, pulling back noticeably from an overheated market condition. The Dow Jones Industrial Average (-6.9%) and Russell 2000 (-7.6%) underperformed the benchmark index, while the Nasdaq Composite declined 5.3%.
The S&P 500 opened the session down 2.1%, ostensibly due to growth worries following a cautious FOMC statement yesterday and reports of increasing rates of coronavirus cases in many U.S. states. The market had rallied despite these growth concerns, though, as the S&P 500 gained as much as 48% from its March 23 low.
Today, then, might have been the day to take profits, which some might say was long overdue. Buyers were largely absent, causing the market to decline in an orderly retreat throughout the day. No sector was spared, with all 11 S&P 500 sectors closing lower between 3.8% (consumer staples) and 9.5% (energy).
Evidently, selling was indiscriminate, but value and cyclical stocks, which were among the leaders on the way up, were hit the hardest for the third straight day. Energy stocks were additionally burdened by the 8% drop in oil prices ($36.41/bbl, -3.13, -7.9%), while those in the financials sector (-8.2%) were pressured by some curve-flattening activity.
The 2-yr yield declined one basis point to 0.16%, while the 10-yr yield declined ten basis points to 0.65% as investors sought some safety in longer-dated maturities. The U.S. Dollar Index rose 0.8% to 96.76.
Notably, the CBOE Volatility Index spiked 48.0% to 40.79, which reflected increased hedging interest against further equity weakness. The S&P 500 did end the session below its 200-day moving average (3013), which is a key technical level many traders observe.
In corporate news, Regeneron Pharma (REGN 596.16, -10.43, -1.7%) said it started clinical trials for its COVID-19 antibody treatment. GrubHub (GRUB 61.79, +2.74, +4.6%) agreed to be acquired by Just Eat Takeaway (TKAYY 9.30, -0.70, -7.0%) for $75.15/share in an all-stock deal.
Reviewing Thursday's economic data:
- Initial jobless claims for the week ending June 6 decreased by 355,000 to a still-high 1.542 million (consensus 1.525 million) while continuing claims for the week ending May 30 decreased by 339,000 to a still stunningly high 20.929 million.
- The key takeaway from this report is that, notwithstanding the hiring activity in May, it shows the labor market remains a long, long way from being back.
- The Producer Price Index for final demand increased 0.4% m/m in May (Consensus +0.1%). The index for final demand, excluding food and energy, declined 0.1% (consensus 0.0%). Those readings left the yr/yr rates at -0.8% and 0.3%, respectively.
- The key takeaway from this report is that it shows why the Fed isn't thinking about raising rates anytime soon.
Looking ahead, investors will receive the preliminary University of Michigan Index of Consumer Sentiment for June and Export and Import Prices for May on Friday.
- Nasdaq Composite +5.8% YTD
- S&P 500 -7.1% YTD
- Dow Jones Industrial Average -12.0% YTD
- Russell 2000 -18.7% YTD
Gapping up
In reaction to strong earnings/guidance:
- SERV +0.6% (guidance)
M&A news:
- GRUB +10.8% (Just Eat Takeaway.com to acquire GrubHub $75.15/share in all-stock deal - CNBC)
Other news:
- SRNE +10.4% (submits Emergency Use Authorization application for the COVI-TRACK diagnostic test)
- RETA +7.5% (Reata Pharmaceuticals and Blackstone Life Sciences (BX) announce $350 million strategic investment)
- ZYXI +7% (to join S&P SmallCap 600)
- PFSI +3.2% (approves repurchase of 6,975,323 shares from BlackRock Foundation at $34/sh)
- JACK +3.1% (provides update; says comps accelerated into JunQ)
- PSTI +2.7% (announced the activation of clinical sites and initiation of enrollment in its Phase II U.S. Food and Drug Administration (FDA) study of PLX cells for the treatment of severe COVID-19 complicated by Acute Respiratory Distress Syndrome)
- REGN +2.5% (publication of two papers in Science describing the creation of its novel two-antibody cocktail, REGN-COV2, and announces that REGN-COV2 has entered human clinical trials)
- PSNL +2.4% (partners with Berry Genomics for expansion in China)
- UN +1.8% (announced plans to unify its Group legal structure under a single parent company, Unilever PLC, creating a simpler company with greater strategic flexibility)
- BNTX +1.2% (receives €100 mln in debt financing for COVID-19 vaccine development and manufacturing)
- PRIM +1.2% (announces three new utility awards valued over $45 mln)
Analyst comments:
- SWAV +0.5% (upgraded to Perform from Underperform at Oppenheimer)
Early premarket gappers
- Gapping up: SRNE +16.7%, ZYXI +9.5%, GRUB +7.4%, JACK +4.2%, BNTX +3.4%, UN +2.8%, PFSI +2.4%, PSNL +2.4%, SNPS +1.4%
- Gapping down: MBIO -26.1%, HTZ -18%, SRT -11.8%, CIM -11.4%, ROAD -10.3%, OXM -7.2%, NIO -5.2%, F -4.8%, NLY -3.7%, UBER -3.6%, LYFT -3.4%, BYD -3.2%, CDNA -2.8%, CTLT -2.5%, COUP -2.3%, ZEN -2%, CNNE -0.7%
Zoom disables accounts of former Tiananmen Square student leader
Chinese dissidents in US were unable to hold memorial call
Zoom disabled the accounts of a group of Chinese dissidents in the US after they used a video conference to commemorate the Tiananmen Square massacre.
Zoom’s role in shutting down the meeting, which was hosted and organised by activists in the US, but saw participants dial in from China, will add to fears about the platform’s security and how it will respond to government censorship requests.
In response to previous criticism, Zoom has added some security measures, and has pledged to release a transparency report by July.
The annual commemoration was hosted by a group of Chinese activists in the US, including Wang Dan, one of the most prominent leaders of the pro-democracy student movement that was massacred by the Chinese army in Tiananmen Square on June 4 1989.
Mr Wang’s team shared screenshots with the Financial Times of his Zoom call being cancelled twice and two of his team’s paid Zoom accounts being disabled. The cancellations started just as the meetings were due to begin on the morning of June 4 in the US, where Mr Wang is based.
Zoom later suggested to the South China Morning Post that the Tiananmen commemoration had violated local laws, saying that “when a meeting is held across different countries, the participants within those countries are required to comply with their respective local laws”.
Zoom did not immediately respond to a request for comment.
There are no Chinese laws against memorialising the Tiananmen massacre or criticising China’s ruling party, although Beijing has punished citizens commemorating Tiananmen by charging them with “inciting subversion of state power”, or the catch-all charge of “provoking quarrels”.
“31 years ago, we were on the streets fighting the Chinese Communist party police; today, these kinds of confrontations have shifted to the realm of cyber space,” wrote Mr Wang on Facebook. “Through destroying freedom of speech online, the CCP seriously threatens freedom of speech and democracy globally.”
Mr Wang’s team attributed the cancellations to hacking attempts or orders from the Chinese Communist party. Beijing has always sought to quell discussion of the Tiananmen Square massacre, although previously focused on its own territory.
“The memorial events for June 4 massacre . . . impair the CCP regime’s legitimacy. Hacking such an online memorial meeting would do nothing beneficial to any other people or organisations except the CCP, especially its top leaders,” said a member of Mr Wang’s team when asked as to the motives behind the attacks.