(Reuters) – U.S. stocks ended higher on Monday as increases in large tech and internet companies and oil price gains outweighed concerns about the latest U.S.-China tensions and downbeat sentiment from the annual meeting of Warren Buffett’s Berkshire Hathaway.
Major U.S. indexes opened lower but moved higher throughout the afternoon to snap two-day losing streaks.
Stocks have rebounded sharply since late March from the coronavirus-fueled sell-off, helped by massive monetary and fiscal stimulus. Investors are now watching efforts by a number of states trying to spark their economies by easing restrictions put in place to fight the outbreak.
On Monday, New York Governor Andrew Cuomo outlined a phased reopening of business in the state hardest hit by the COVID-19 pandemic. California Governor Gavin Newsom said that retail businesses in the state may begin reopening as early as this week.
“Can you lift restrictions and begin to phase in economic activity and yet keep the number of cases at bay? That is what the market is focused on right now,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
The Dow Jones Industrial Average .DJI rose 26.07 points, or 0.11%, to 23,749.76, the S&P 500 .SPX gained 12.03 points, or 0.42%, to 2,842.74 and the Nasdaq Composite .IXIC added 105.77 points, or 1.23%, to 8,710.72.
Energy .SPNY was the best performing S&P 500 sector, rising 3.7%, as oil prices gained.
Shares of Delta Air Lines Inc (DAL.N), American Airlines Group Inc (AAL.O), Southwest Airlines Co (LUV.N) and United Airlines Holdings Inc (UAL.O) fell between 5% and 8%, among the biggest decliners on the S&P 500 after Berkshire Hathaway dumped stakes in major U.S. airlines.
Shares of Berkshire (BRKa.N) itself fell 2.6% and weighed on the S&P 500 after the conglomerate posted a record quarterly net loss of nearly $50 billion.
Buffett, whose comments are closely followed by investors, acknowledged at Berkshire’s annual meeting on Saturday that the pandemic could significantly damage the economy and his investments.
“His narrative was relatively sober compared to his posture over the years,” said Emily Roland, co-chief investment strategist at John Hancock Investment Management.
A flare-up in U.S.-China tensions also pressured the market. Secretary of State Mike Pompeo said on Sunday there was “a significant amount of evidence” that the new coronavirus emerged from a Chinese laboratory. An editorial in China’s Global Times said he was “bluffing”.
Investors are also digesting a difficult corporate results season. With more than half of S&P 500 companies reporting so far, first-quarter earnings are expected to have fallen 12.5%, according to Refinitiv data.
Shares of Tyson Foods Inc (TSN.N) tumbled 7.8% after the company said the coronavirus crisis will continue to idle U.S. meat plants and slow production as it reported lower-than-expected earnings and revenue for the quarter.
Data on Monday showed new orders for U.S.-made goods suffered a record decline in March and could sink further as disruptions from the coronavirus fracture supply chains and depress exports.
Declining issues outnumbered advancing ones on the NYSE by a 1.09-to-1 ratio; on Nasdaq, a 1.14-to-1 ratio favored advancers.
The S&P 500 posted no new 52-week highs and three new lows; the Nasdaq Composite recorded 18 new highs and 14 new lows.
About 9.5 billion shares changed hands in U.S. exchanges, below the 12.1 billion-share daily average over the last 20 sessions.
Additional reporting by Shreyashi Sanyal and Medha Singh in Bengaluru; Editing by Arun Koyyur, Aurora Ellis, Jonathan Oatis and David Gregorio
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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