Wednesday’s trading by the numbers
Dow Jones Industrial Average
- The Dow gained 0.68%, its third positive session in four.
- The Dow is up 0.93% week to date, on pace for its second positive week in a row and third positive week in four.
- Apple had the greatest positive impact on the Dow, adding 54 points to the index.
- The S&P 500 gained 0.78%, its sixth positive session in seven.
- The S&P is up 1.28% week to date, on pace for its second positive week in a row, and its third positive week in four.
- Apple and Microsoft had the greatest positive impact on the SPY, adding 0.40 points to the ETF, respectively.
- The Nasdaq Composite gained 1.44%, its sixth positive session in seven.
- The Nasdaq Composite is up 2.7% week to date, on pace for its second positive week in a row, and its third positive week in four.
- The Nasdaq Composite finished at a record close, its 25th record close of 2020. — Thomas Franck, Christopher Hayes
Stocks close higher as tech rally buoys Nasdaq 1.4%
Big Tech continued to carry the broader market higher on Wednesday and again allowed the Nasdaq Composite to outpace the S&P 500 and Dow industrials. The Nasdaq rose 1.4% between a 2.3% rally in Apple, a 2.7% rise in Amazon and a 3.49% climb in Nvidia. The S&P 500 notched a more modest 0.79% gain while Microsoft and Goldman Sachs helped push the Dow up 177 points, or 0.69%. — Thomas Franck
Airline stocks rebound
Airline stocks cut their losses in afternoon trading and some even turned positive. Shares of United, which warned more than 30,000 employees of possible layoffs early Wednesday, rose 0.5%. American Airlines gained 0.6%. Delta Air Lines was trading 0.3% below breakeven after being down more than 3% earlier in the session. — Jesse Pound
Morgan Stanley’s Tesla analyst says the ‘Power of Hope’ is carrying the stock
Morgan Stanley analyst Adam Jonas, who’s garnered a following for his coverage of Tesla, wrote in a note Wednesday that the electric car company’s equity rally is increasingly a product of the “Power of Hope.” Jonas reiterated his underweight call on Tesla and said that China risks, competition from Big Tech and high expectations are reasons to value its equity far below current levels around $1,400 a share. Jonas has a price target on Tesla of $740, representing 46% downside from Tuesday’s close.
“The power of hope, the formation of capital and the movement of share prices have long co-existed in a symbiotic relationship. Hope is the fuel of democratic capitalism. It doesn’t always work out, but when it does… it’s special,” Jonas wrote. “In the case of Tesla, in addition to the company’s proven leadership in EVs and sustainable transport, we believe investor hope has been playing an increasingly important role in driving a higher stock price.” — Thomas Franck
Final hour of trading: Big Tech leads stocks higher as reopening trade struggles
The major averages were headed for slight gains with one hour left in the session as shares of major tech companies led the way higher. The Dow was up 15 points, or 0.1%. The S&P 500 also gained 0.1% while the Nasdaq Composite gained 0.7%. Airlines — a group that benefits from the economy reopening — fell broadly. —Fred Imbert
LPL Financial says growth stocks could keep on rising
Growth stocks have dominated their value counterparts massively this year and LPL Financial’s Jeffrey Buchbinder thinks the gap could widen from here. “The dominance of growth stocks is one of the biggest stories for the market in 2020,” said Buchbinder, an equity strategist at the firm, in a post. “Stronger balance sheets, better earnings, and favorable positioning for the work-from-home trend suggest this historic run for growth stocks over the past decade may still have legs.” The Russell 1000 Growth index is up 11.5% for the year while the Russell 1000 Value index has plunged more than 17% in that time. —Fred Imbert
NYSE advancers and decliners in a dead heat as market struggles for direction
The number of advancing New York Stock Exchange-listed names was about the same of those declining as the market had a hard time getting traction. Overall, 1,426 NYSE-listed names traded higher while 1,461 issues were lower, according to FactSet. —Fred Imbert
Apple Maps driving activity is slowing again in warning sign for the economy
As coronavirus cases surge across the United States, Apple Maps data shows a slowdown in requests for driving directions, a potential warning sign as the country works to restart its economy amid the pandemic. While economic data reports typically lag by a month or so and may not capture the most recent developments caused by the fast-moving virus, the Apple mobility data is an example of the kind of “high-frequency” indicators some investors are keeping an eye on.
The data from Apple tracks the change in volume of directions requests compared to a baseline level on January 13, 2020, before the Covid-19 outbreak made its way around the globe. Following a sharp decline in March, requests for driving, walking, and transit directions had been steadily increasing in the U.S. But after reaching a peak in early July, driving direction requests have dropped by 6% over the past few days, based on the change in a seven-day moving average. The four states that are the leaders in average daily new reported cases over the past week, according to Johns Hopkins University data — Florida, Texas, California, and Arizona — have each seen a recent decline in driving directions requests. — Nate Rattner
Stocks making the biggest moves midday
Nikola — Shares of Nikola soared 24% after JPMorgan hiked its rating on the controversial electric vehicle company to overweight from neutral, saying the stock looks attractive for long-term investors after a 40% plunge this month alone.
Levi Strauss — Shares of the denim maker dropped nearly 8% after the company reported a 62% fall in sales during its fiscal second quarter. It also announced it will be slashing about 15% of its global corporate workforce.
National General Holdings — Shares of National General Holdings surged more than 60% after insurer Allstate agreed to buy the company for about $4 billion as it looks to expand the personal lines insurance business.
Taylor Morrison Home — Shares of the home builder jumped more than 13% after the company reported net sales orders in June nearly doubled compared with last year. Closings also rose 24% in the second quarter compared with the prior year.
Read more here. – Yun Li
Divided payments plunge in Q2 in worst quarter since the financial crisis
Dividend payouts in the second quarter fell by their fastest level since the financial crisis. The net change for Q2 showed a plunge of $42.5 billion from the same period a year ago as companies struggled with the coronavirus-induced slowdown, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Dividend increases in the quarter totaled just $6.7 billion against $49.2 billion in decreases, which was a 1,156% increase. Silverblatt said there are signs that the cut in dividends has seen the worst, though that could change depending on the path of the virus. — Jeff Cox
United warns about jobs cuts to a third of its workforce
United Airlines sent warnings to about 36,000 frontline employees about potential furloughs on Wednesday as the company continues to grapple with the decline in travel demand from the coronavirus. United and other airlines that took $25 billion in federal payroll support are prohibited from laying off, furloughing or cutting the pay rates of staff until Oct. 1. United shares fell more than 3%. — Maggie Fitzgerald
Markets at midday: Stocks cut gains as reopening trade falters
Stocks were well off their session highs around midday as shares of companies that would benefit from the economy reopening were under pressure. The Dow traded just 20 points higher, or 0.1%, after being up more than 200 points. The S&P 500 and Nasdaq were up 0.2% and 0.8%, respectively. —Fred Imbert
Twitter shares rise on indication of new subscription platform
Shares of Twitter rose more than 6% after the company posted a job listing for a new team focused on building a subscription platform. The new initiative is code named “Gryphon,” and while little has been revealed about the new platform, the posting said it will involve working with the payments as well as Twitter.com teams. – Pippa Stevens
Wall Street analysts raise Netflix price targets ahead of next week’s earnings report
Two investment firms raised their price targets on Netflix on Wednesday, as Wall Street continues to have high expectations for the streaming giant ahead of its earnings report on July 16. “With our 2Q:20 preview we increase our paid net add expectations for 2Q as strong over-the-top demand, a shortage of events / linear programming, and stay-at-home tailwinds continued in the quarter,” Stifel analyst Scott Devitt said. The firm upped its price target to $500 from $460, while reiterating its hold rating. Rosenblatt, which also has a neutral rating on the stock, raised its target to $445 from $370. Shares gained more than 1% on Wednesday to trade around the $500 mark. – Michael Bloom
Gold tops $1,800, hits a 9-year high
Spot gold rose more than 1% on Wednesday to about $1,813 an ounce, marking the first time the precious metal has breached the $1,800 threshold since 2011. U.S. gold futures rose 0.8% to around $1,824 per ounce. Mounting fears over a coronavirus resurgence sparked a flight to safe-haven assets, pushing gold prices to a nine-year high. The SPDR Gold Trust, the biggest gold exchange-traded fund, has soared nearly 20% this year. – Yun Li
Stocks open slightly higher, Big Tech shares gain
Stocks started the session slightly higher as investors assessed a record daily spike in U.S. coronavirus cases. The Dow rose 50 points, and the S&P 500 climbed 0.3%. The Nasdaq Composite outperformed slightly, rising 0.6%, as Amazon, Apple, Netflix and Microsoft all gained about 1%. — Yun Li
Kudlow: U.S. has seen ‘huge’ jump in Covid cases, data points to V-shaped recovery
President Donald Trump’s chief economic advisor, Larry Kudlow, said Wednesday he doesn’t believe the administration is underplaying the threat the coronavirus poses to everyday Americans.”No one’s denied we’ve had a huge jump in cases in certain hot spots. Particularly, it looks like the virus migrated south and then west, so you’re seeing difficult stories on the cases in Florida, I guess a bit in Georgia. Huge in Texas, Arizona, Southern California. I don’t know anybody that’s downplayed that,” Kudlow, who serves as Trump’s Director of the National Economic Council, said on CNBC’s “Squawk Box” from the White House.
He told CNBC on June 22 that “there is no second wave” of coronavirus cases coming and that reports of accelerating infections at the time were “just hot spots.” The U.S. has confirmed more than 680,000 new cases since then, a jump of 29.6%.
Kudlow also said Wednesday that despite uncertainty, current data suggests a robust, V-shaped economic recovery:
“One cannot rule out: There’s a lot of scenarios here. We really don’t have any real experience in econometrics modeling for this type of things. Because so much is generated by the virus. At the moment, we’ve created 8 million new jobs the last couple of months. … Virtually every piece of data shows a V-shaped recovery.” — Thomas Franck
Alcoa shares pop on preliminary second-quarter results
Alcoa traded more than 5% higher in the premarket after the company reported solid preliminary results for the second quarter. Alcoa said it expects revenues ranging between $2.1 billion and $2.175 billion. The company also sees adjusted EBITDA ranging between $175 million and $190 million. FactSet had forecast sales of $2.09 billion for Alcoa’s second quarter. “We’ve not only managed to sustain our operations during these challenging times, but we’ve also continued to drive for sustainable improvements,” CEO Roy Harvey said in a statement. — Fred Imbert
Here are Wednesday’s biggest analyst calls of the day:
- JPMorgan upgraded Nikola to overweight from neutral
- Bank of America upgraded Caterpillar to neutral from underperform
- Barclays downgraded Altria to equal weight from overweight
- Bank of America upgraded Kohl’s to buy from neutral
- Seaport initiated Citi, Goldman Sachs, JPMorgan, and Morgan Stanley as buy
- Goldman Sachs raised its price target on Tesla to $1,300 from $950
- Citi added a positive catalyst watch on J.B. Hunt
- Citi downgraded American Express to neutral from buy
CNBC Pro subscribers read more here. —Michael Bloom
Nikola surges 11% after JPMorgan upgrades controversial stock
Next round of PPP loans likely to face restrictions, report says
Another round of small business loans from Congress is facing pushback over concerns that money is flowing to recipients that don’t need it. Disclosures earlier this week for the Paycheck Protection Program show that the $521.2-billion program provided forgivable loans to major restaurant chains, celebrity restaurants and congressional lobbyists. Now, some officials are resisting calls for more funding to the expired program, according to a Politico report. “It’s important for taxpayers and for the administration to ask whether some of these companies followed the rules,” Rep. Ben McAdams, D-Utah, told the publication. While another round of funding is likely, it’s also probable that there will be restrictions attached to make sure that small businesses in need are the beneficiaries, rather than bigger companies and those with political connections. — Jeff Cox
Airlines fall as Covid-19 cases rise
Airline stocks slipped during premarket trading on Wednesday as the global number of Covid-19 cases continues to rise. United Airlines fell more than 2%, while American Airlines and Delta Air Lines each traded about 1% lower. The group has been among the hardest hit as the pandemic grounded planes worldwide. The three airlines have all lost more than half of their value this year. — Pippa Stevens
Facebook slips after civil-rights groups call meeting ‘a disappointment’
Facebook stock fell 0.6% in premarket trading Wednesday after civil-rights groups who met with the company’s leadership called the discussion “a disappointment.” CEO Mark Zuckerberg and COO Sheryl Sandberg met on Tuesday with leaders from the NAACP, the Anti-Defamation League, Color of Change and Free Press. The coalition of civil-rights groups has urged Facebook to do more to stop the spread of hate speech and misinformation on its platforms and has pressured advertisers to halt spending until material change occurs. — Thomas Franck
AMC surges on report of new financing deal
Shares of movie theater chain AMC Entertainment jumped more than 11% in premarket trading after the Wall Street Journal reported that the company is close to securing financing that it will help it stave off bankruptcy. The restructuring would involve senior debt holders providing a $200 million loan to the company, according to the report. — Jesse Pound