Stocks ended the session lower on Tuesday, with Wall Street taking a breather from a three-session win streak, with investors digesting the gradual relaxation of coronavirus lockdowns and the latest batch of corporate earnings.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="On Monday, a trifecta of good news powered the Dow and S&P 500 Index to their best day in over a month. Yet stocks took a leg lower on Tuesday after a report late in the trading day questioned the significance of the data Moderna (MRNA) provided in assessing its experimental COVID-19 vaccine candidate. The positive results initially sent stocks on a tear, and fed optimism about a recovery from the ravages of the pandemic.” data-reactid=”18″>On Monday, a trifecta of good news powered the Dow and S&P 500 Index to their best day in over a month. Yet stocks took a leg lower on Tuesday after a report late in the trading day questioned the significance of the data Moderna (MRNA) provided in assessing its experimental COVID-19 vaccine candidate. The positive results initially sent stocks on a tear, and fed optimism about a recovery from the ravages of the pandemic.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Home Depot (HD) weighed on the Dow, after the home-improvement giant reported weaker than expected quarterly profit. This came alongside declines in Walmart (WMT), which fell by the end of the session despite beating expectations for quarterly results after consumers flocked to the company’s grocery and home-goods delivery and pick-up services during the pandemic. The stock flirted with a new 52-week high before ending the session more than 2% lower.” data-reactid=”19″>Home Depot (HD) weighed on the Dow, after the home-improvement giant reported weaker than expected quarterly profit. This came alongside declines in Walmart (WMT), which fell by the end of the session despite beating expectations for quarterly results after consumers flocked to the company’s grocery and home-goods delivery and pick-up services during the pandemic. The stock flirted with a new 52-week high before ending the session more than 2% lower.
During the session, Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin failed to create any fireworks in testimony that lasted over two hours. However, both men reiterated the government’s policy support for a U.S. economy in which the risks remain firmly tilted toward the downside.
“Investors did not learn anything groundbreaking with respect to the Fed’s and US government policy response to COVID-19,” said Edward Moya, senior Market Analyst at OANDA.
“The wait-and-see economy is here and it seems the reopening of the economy will need to unfold before we can start to speculate on how much more stimulus will come into play,” he added.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="States and cities are gradually relaxing restrictions that have sent the economy into a tailspin. The cautious moves have been enough to spark market hopes for a relatively brisk economic revival, and along with the potential for an effective COVID-19 treatment, have been enough to blunt the impact of ugly U.S. economic data.” data-reactid=”23″>States and cities are gradually relaxing restrictions that have sent the economy into a tailspin. The cautious moves have been enough to spark market hopes for a relatively brisk economic revival, and along with the potential for an effective COVID-19 treatment, have been enough to blunt the impact of ugly U.S. economic data.
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<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="4:04 p.m. ET: Stocks end lower as investors take breather after 3-day rally” data-reactid=”25″>4:04 p.m. ET: Stocks end lower as investors take breather after 3-day rally
Here were the main moves in markets as of 4:04 p.m. ET:
Gold (GC=F): +$12.60 (+0.73%) to $1,747.00 per ounce
10-year Treasury (^TNX): -3.3 bps to yield 0.7110%
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3:12 p.m: Moderna drops more than 9% after report questions vaccine data
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Moderna (MRNA) shares dropped 9%, paring some of Monday’s surge, after STAT News published an article citing experts who suggested “we ought to take the early readout” from the company’s vaccine Phase 1 trial “with a big grain of salt.”” data-reactid=”36″>Moderna (MRNA) shares dropped 9%, paring some of Monday’s surge, after STAT News published an article citing experts who suggested “we ought to take the early readout” from the company’s vaccine Phase 1 trial “with a big grain of salt.”
The three major indices also dipped following the report, with the Dow falling more than 200 points.
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2:45 p.m. ET: Crude oil settles at two-month high
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="July futures for West Texas intermediate crude oil (CL=F) settled higher by 2.1% to $32.50 per barrel on Tuesday, hitting the highest level in two months. The move higher marked the fourth straight settlement higher for the commodity, which has gained 64% since May 1 as fears of dried up demand and an oversupplied market eased. However, WTI crude remains about 46% lower for the year to date.” data-reactid=”40″>July futures for West Texas intermediate crude oil (CL=F) settled higher by 2.1% to $32.50 per barrel on Tuesday, hitting the highest level in two months. The move higher marked the fourth straight settlement higher for the commodity, which has gained 64% since May 1 as fears of dried up demand and an oversupplied market eased. However, WTI crude remains about 46% lower for the year to date.
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12:17 p.m. ET: Stocks mixed as session rolls on
Here were the main moves in markets, as of 12:17 p.m. ET:
S&P 500 (^GSPC): -3.64 points (+0.12%) to 2,957.55
10:26 a.m. ET: Mnuchin expects ‘economic conditions to improve’ in second half of the year
Treasury Secretary Steven Mnuchin said Tuesday he anticipates “economic conditions to improve in the third and fourth quarters” this year. Mnuchin spoke during testimony alongside Federal Reserve Chair Jerome Powell before the U.S. Senate Banking Committee Tuesday morning.
The Coronavirus Aid, Relief and Economic Security Act (CARES) Act has already unleashed some $200 billion in credit support so far for businesses and individuals amid the pandemic, and has still more capital “to expand these as needed,” Mnuchin added.
Shortly thereafter, Mnuchin added, “We are fully prepared to take losses in certain scenarios” from funds that are yet to be distributed as part of the CARES Act.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Luckin Coffee (LK) disclosed Tuesday it received a delisting notice from the Nasdaq on May 15, with the exchange citing “public interest concerns as raised by the fabricated transactions disclosed by the Company in a Form 6-K on April 2, 2020.”” data-reactid=”58″>Luckin Coffee (LK) disclosed Tuesday it received a delisting notice from the Nasdaq on May 15, with the exchange citing “public interest concerns as raised by the fabricated transactions disclosed by the Company in a Form 6-K on April 2, 2020.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Luckin Coffee, a Chinese company once viewed as a competitor to Starbucks, had said earlier in April it found employees including its former chief operating officer fabricated hundreds of millions in sales in financial results last year.” data-reactid=”63″>Luckin Coffee, a Chinese company once viewed as a competitor to Starbucks, had said earlier in April it found employees including its former chief operating officer fabricated hundreds of millions in sales in financial results last year.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The company said in a statement it “plans to request a hearing” and will remain listed on the Nasdaq for the time being, pending the outcome of the hearing.” data-reactid=”64″>The company said in a statement it “plans to request a hearing” and will remain listed on the Nasdaq for the time being, pending the outcome of the hearing.
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9:31 a.m. ET: Stocks open slightly lower after weak economic data, mixed earnings
Here were the main moves in markets, as of 9:31 a.m. ET:
S&P 500 (^GSPC): -7.77 points (-0.26%) to 2,946.14
8:30 a.m. ET: Housing starts hit lowest level since 2015 in April
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Housing starts tumbled more than expected in April, signaling a persistently tough housing market amid the coronavirus pandemic.” data-reactid=”77″>Housing starts tumbled more than expected in April, signaling a persistently tough housing market amid the coronavirus pandemic.
New housing starts fell by 30.2% over March to a seasonally adjusted annual rate of 891,000, or the lowest level since February 2015. Consensus economists had expected housing starts to drop by 26% to 900,000. March’s starts were revised up to 1.276 million, constituting an 18.6% decline over the prior month.
Building permits, which serve as a proxy for future home-building, also fell in April over March, but at a slower pace than expected. These dropped 20.8% to a seasonally adjusted annual rate of 1.074 million, versus a drop of nearly 26% to 1 million expected. This extended a 5.7% month-over-month decline in building permits in March.
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7:43 a.m. ET: Stock futures hug the flat line, paring earlier losses after mixed earnings
Here were the main moves in markets, as of 7:43 a.m. ET Tuesday:
S&P 500 futures (ES=F): down 3.25 points, or 0.11%, to 2,944.75
Dow futures (YM=F): up 8 points, or 0.03%, to 24,515.00
Nasdaq futures (NQ=F): up 11.25 points, or 0.12%, to 9,336.75
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Home Depot (HD) reported stronger than expected quarterly comparable sales growth, with this metric rising 6.4% versus 4.5% expected.” data-reactid=”89″>Home Depot (HD) reported stronger than expected quarterly comparable sales growth, with this metric rising 6.4% versus 4.5% expected.
However, the home improvement giant’s bottom-line results missed expectations, with earnings per share of $2.08 short of estimates by 17 cents, and EBITDA falling about 11% over last year. This came as Home Depot incurred pre-tax expenses of about $850 million to roll out coronavirus-related new measures to support associates, including adding additional paid time off and weekly bonuses for hourly workers in stores and distribution centers.
Home Depot also joined a host of other companies in withdrawing its full-year guidance, citing a lack of visibility due to the coronavirus.
“While sales trends were strong at the end of the first quarter and into the first two weeks of the second quarter, as a result of the uncertainty related to the duration of Covid-19 and its impact on the broader economy, the Company is suspending its previously communicated fiscal 2020 guidance,” the company said in a statement.
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7:23 a.m. ET: Walmart posts better than expected Q1 sales, profit; stock nears record high
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Walmart (WMT) posted first-quarter results that topped consensus expectations on both the top and bottom lines, as the retailer benefited from a consumer run on home goods sparked during the coronavirus pandemic.” data-reactid=”95″>Walmart (WMT) posted first-quarter results that topped consensus expectations on both the top and bottom lines, as the retailer benefited from a consumer run on home goods sparked during the coronavirus pandemic.
Adjusted earnings per share of $1.18 on revenue of $134.6 billion each beat estimates, which were for adjusted EPS of $1.12 and sales of $132.48 billion. U.S. comparable same-store sales, excluding gas, grew 10%, or better than the 8.6% rise expected.
E-commerce sales surged 74% during the first-quarter, with both online grocery pickup and delivery services contributing to the gain.
Shares of Walmart jumped about 5% to about $134 per share shortly after reporting results. The gains, if held into the regular session, would mark a fresh record high for the stock.
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7:09 a.m. ET Tuesday: Stock futures slip, indicating lower open
Here were the main moves in markets, as of 7:11 a.m. ET Tuesday:
S&P 500 futures (ES=F): down 11.5 points, or 0.39%, to 2,936.50
Dow futures (YM=F): down 90 points, or 0.37%, to 24,417.00
Nasdaq futures (NQ=F): down 12.25 points, or 0.13%, to 9,313.25
Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.
The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.
Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.
The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.
The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.
The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.
The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.
Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.
In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.
“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.
As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.
Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.
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