By Yasin Ebrahim
Investing.com – The Dow turned higher on Friday, led by tech as investors weighed up further evidence of weakness in the economy against the backdrop of fresh economic stimulus measures.
The was up 0.60%, the rose 0.84%, while the gained 1.03%.
In a further sign the economic downturn is likely to be severe, U.S. durable goods orders fell by 14.4% last month, the biggest slide since 2014, led by waning demand for big-ticket items such as cars and slump in orders for Boeing (NYSE:) passenger planes.
But some on Wall Street suggested the underlying data was more resilient and the weakness was largely driven by transportation orders.
“Outside of transportation, we saw an underlying resiliency in the face of the lockdowns, at least in March,” Jefferies said in a note.
The weaker-than-expected data come just as President Donald Trump signed the $484 billion coronavirus stimulus package into law to ease the Covid-19 hit to the economy at a time when some states are set to reopen.
But with worries over the pandemic still running high, some of the biggest companies are wary of opening for business, with Macy’s (NYSE:), Gap (NYSE:), and TGI Fridays choosing to remain shuttered in states such as Georgia and South Carolina.
Energy stocks, meanwhile, moved off session lows to trade 1% higher even as oil prices lost some gains into settlement.
But ahead of major tech earnings next week, including from Facebook (NASDAQ:), Alphabet (NASDAQ:), Apple (NASDAQ:) and Amazon (NASDAQ:), investors showed some interest in the sector.
Chip stocks also edged higher, with the up about 2%, as Intel (NASDAQ:) cut its losses to trade flat.
Intel reported earnings that topped estimates, but the chipmaker pulled its guidance, stoking concerns its future growth is more likely to ease rather than accelerate.
Airlines, meanwhile, were given a slight lift off the lows after President Trump reportedly suggested the government should buy “4-5 years worth of airline tickets” in advance to boost airlines.
American Airlines (NASDAQ:) was up about 0.9%, United Airlines (NASDAQ:), and Delta Air Lines were down about 0.5%.
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Scotiabank profit plunges 40% as bad loans more than double amid COVID-19 – CBC.ca
Scotiabank posted a profit Tuesday morning of $1.32 billion in the three months up to the end of April, a fall of more than 40 per cent from last year’s level as the bank set aside twice as much money for bad loans.
The bank’s provisions for credit losses totalled nearly $1.85 billion for the quarter. That’s up 111 per cent from the $873 million worth of bad loans the bank revealed in the same three months last year, well before the COVID-19 pandemic crushed the economy.
Higher loan loss provisions don’t necessarily mean that all of those loans will end up defaulting. Rather, it just means that they aren’t being actively being paid back as planned.
The bank revealed on Tuesday that 300,000 of its Canadian customers have applied for some sort of financial relief on the $60 billion they collectively owe to the bank. That would include mortgagees who asked for interest rate deferrals.
Scotiabank has a huge presence in Latin America, and the bank says it has processed two million applications for loan relief from its international customers.
Not all of those loans will necessarily end up defaulting, but some may. So the uptick in loan loss provisions is troubling.
Scotia is the first of Canada’s big banks to reveal its financial performance through the current pandemic, numbers which will be closely scrutinized as they are considered to be a bellwether for the broader economy. That’s because pain at other businesses tends to show up on the books of the banks that lend to them.
Canada’s other big banks — Royal, Toronto-Dominion, Canadian Imperial Bank of Commerce and Bank of Montreal — will report earnings in the next few days.
On an adjusted basis, Scotiabank’s profit for the quarter came in at $1.04 per diluted share. That’s well down from $1.70 per diluted share a year ago, but ahead of the 98 cents that analysts who cover the bank were expecting.
Not all bad news
But not all parts of the bank’s business saw tough times. Indeed, some did even better than usual.
Scotia’s global wealth management business posted a profit of $314 million, an increase of four per cent over last year’s level. That uptick came about with investors around the world becoming much more active than usual as global stock markets plummeted.
“This quarter saw record results for both new client account openings and trading volumes in Scotia iTRADE,” the bank said.
Similarly, the global banking and markets business posted a profit of $523 million, up 25 per cent from a year earlier.
Scotiabank's loan-loss provisions double on coronavirus risks – The Globe and Mail
Bank of Nova Scotia on Tuesday reported quarterly profit that beat analysts’ estimates due to a strong performance in the capital markets business, but the bank’s loan loss provisions jumped two-fold.
Provisions for loan losses at Scotia more than doubled to $1.85 billion from a year earlier as it set aside more money to meet future losses.
Canadian banks are expected to face loan defaults as the coronavirus pandemic drives the world into a recession, leaving small and medium-sized businesses scrambling to meet their debt payments.
The bank said commercial and corporate performing loan provisions increased by $275 million, hurt by the poor macroeconomic outlook and a plunge in oil prices that impacted the energy sector globally.
Adjusted net income at its global wealth management segment rose 3 per cent to $314 million, while profit at the global banking and markets business jumped 25 per cent to $523 million.
Canada’s third-biggest lender said net income fell to $1.24 billion, or $1 per share, in the quarter ended April 30, from $2.13 billion, or $1.73 per share, a year earlier.
On an adjusted basis, the lender earned $1.04 per share, compared with analysts’ estimate for profit of $0.98 per share, according to IBES data from Refinitiv.
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