Market Brief: June 22, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Monday, June 22, 2020
Overlooking Covid-19. U.S. stocks booked modest gains on Monday as investors largely overlooked the rising tally of coronavirus cases across the U.S., amid hopes that efforts to reopen the economy would continue to make progress. The Dow Jones Industrial Average advanced more than 153 points, or 0.6%, to end around 26,025. The Nasdaq Composite gained 110 points, or 1.1%, to finish near 10,056. The S&P 500 rose 20 points, or 0.7%, to 3118. The day’s gains were led by technology shares, propelling the Nasdaq above the 10,000 level. Even as 24 states showed an increasing trend in cases this past week, investors aren’t expecting new lockdown measures to be put in place, allowing the U.S. recovery to truck on. In company news, shares of American Airlines Group fell 6.7% after the air carrier announced Sunday that it would raise $3.5 billion in new financing.
DJIA 26,024.96 153.50
S&P 500 3,117.86 20.12
NASDAQ 10,056.47 110.35
US 10-Year Note 0.71 0.01
Dollar Index 97.08 -0.55
Crude Oil 40.60 0.85
Gold 1,766.30 13.30
Global Dow 2,845.28 6.16
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Home Sales Slid in May. That’s Likely the Bottom as Buyers Emerge From Lockdown.
Sales of previously owned homes slid in May, reflecting fewer contract signings during lockdowns. Investors should expect, however, for such sales to rise in coming months.

Existing-home sales fell 9.7% last month from April, to a seasonally adjusted annual rate of 3.91 million, the National Association of Realtors said Monday. Economists polled by FactSet expected a smaller decline to an annual rate of 4.175 million, from 4.330 million a month earlier.

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Google Ad Revenue Seen Falling in 2020 on Sharp Hit to Travel
Google’s advertising revenue will decline in 2020 for the first time ever, according to a new forecast by eMarketer, an advertising and marketing research firm, as the search ads business feels the effects of a deep decline in travel-related advertising because of the pandemic.

The Alphabet unit is expected to have 2020 digital ad sales of $39.58 billion, down 5.3% from the previous year. Google’s share of the digital ad market is expected to decline to 29.4%, from 31.6% last year.

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Apple’s WWDC Is Today. Here’s Everything That’s Been Announced So Far.
Apple CEO Tim Cook kicked off the company’s first ever virtual Worldwide Developers Conference with comments on the world’s biggest issues—racism and inequality and the Covid-19 pandemic—and then passed the baton to other execs with a flurry of updates.

Among those executives was Craig Federighi, Apple’s senior vice president of Software Engineering, who provided a look at iOS 14, the new version of the iPhone operating system. There’s a new feature called App Library, to make it easier to automatically find and organize apps. You can hide some pages if you want to simplify your experience. There are suggestion features—and a set of recently downloaded apps.

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Airlines Are Raising More Money
Airlines are raising capital again.

American Airlines Group said in a filing on Monday that it was raising $3.5 billion through a mix of senior secured debt, common stock, convertible notes, and a new term loan facility. United Airlines Holdings, meanwhile, is gearing up to issue $5 billion in debt this week, according to Bloomberg, using its frequent-flier mileage program as collateral. Both companies’ shares closed lower Monday.

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PG&E Is Emerging From Bankruptcy After Its Financing Plan Was Approved
PG&E Corp. is on its way out of bankruptcy court—a little more than a week ahead of an important deadline—after the judge approved its financing plan on Saturday.

The California electric utility said Sunday it had completed or priced nearly $14 billion of debt offerings, at both the operating- and holding-company levels. The bonds were sold as part of the restructuring plan that was approved by the bankruptcy court on Saturday. It said in a May presentation that it expected to raise roughly $6 billion of additional debt with bridge financing that it aims to refinance with tax-exempt bonds.

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Gilead to Begin Phase 1 Trials of an Inhaled Version of Remdesivir
Gilead Sciences stock has been a winner in 2020, as investors hope that one of its drugs could prove an effective treatment for Covid-19. Now the biotech firm looks one step closer to that catalyst, announcing it will start Phase 1 trials of an inhaled version of remdesivir in August.

In an open letter on Monday, Gilead Chairman and CEO Daniel O’Day writes that he hopes an inhaled version of the drug (currently administered intravenously for Covid-19 patients), would allow for easier treatment outside of a hospital setting, and could reach patients at an earlier stage of the disease.

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Fintech nCino Files to Go Public
NCino, which provides cloud-based software for financial institutions, has filed to go public.

The Wilmington, N.C., fintech is seeking to raise $100 million via an initial public offering, according to a securities filing on Monday. The $100 million is a placeholder that will likely change in future filings. The company did not disclose how many shares it would raise or their price range. That information will be in future filings.

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GE Is Getting a New Auditor. That Almost Never Happens.
Industrial conglomerate General Electric is changing auditors. The long-brewing decision was made on Friday and announced Monday.

GE said Deloitte & Touche will take over for KPMG after KPMG signs off on GE’s 2020 financial statements. At least some shareholders will be happy with the news. KPMG lost some support in recent years as losses tied to GE’s power and insurance businesses grew.

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There’s More Than Space Tourism in the Stars for Virgin Galactic
Space tourism pioneer Virgin Galactic shocked investors Monday, signing a Space Act Agreement with NASA. And now its stock is spiking.

The stock is on the move because the agreement represents something new for Virgin Galactic. Up until now, the company has been focused on space tourism, taking paying customers to the edge of the atmosphere in a “space glider,” as well as developing hypersonic commercial air travel. Now the company will also help train non-NASA astronauts to go to space, so more people can participate in the “low earth economy,” or LEO for short. That’s a step beyond Virgin Galactic’s space-tourism focus.

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Expect a Big Marijuana Legalization Wave Among States in 2021
The coronavirus pandemic has slowed a number of states’ efforts to legalize cannabis, at least in the near term. It could have the opposite effect in 2021.

Canaccord Genuity analyst Bobby Burleson in December pointed to 16 states that he expected to put pot legalization on their ballots this election year. That list has since dwindled as Covid-19 has dominated officials’ attention, slowing down ballot initiatives across the nation. Burleson thinks such a slowdown may be temporary. He points to budget shortfalls in states forced to shut down, especially ones that have been weighing legalization already, as motivation to legalize cannabis for tax revenue.

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