Market Brief: June 25, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Thursday, June 25, 2020
Overhauling the Volcker Rule. U.S. stocks closed higher on Thursday as financial-sector equities rallied on news that regulators would loosen restrictions on the banking sector. The S&P 500 rose 1.1% to end near 3084. The Dow Jones Industrial Average advanced 300 points, or 1.2%, to finish around 25,746. The Nasdaq Composite gained 108 points, or 1.1%, to close around 10,017. Despite a wave of U.S. states reporting record high tallies of new coronavirus cases, equities rallied after regulators said they are planning to loosen the restrictions imposed by the Volcker rule, allowing banks to more easily make large investments in venture capital and similar funds. This comes ahead of the release of the financial industry’s stress test results by the Federal Reserve.
DJIA 25,745.60 299.66
S&P 500 3,083.76 33.43
NASDAQ 10,017.00 107.84
US 10-Year Note 0.69 0.00
Dollar Index 97.34 0.19
Crude Oil 39.04 1.03
Gold 1,772.70 -2.40
Global Dow 2,816.68 13.38
Powered by Dow Jones Research, FactSet, Eurostat, SIX Financial Information.
Bank Regulators Ease Up on the Volcker Rule
Bank investors bracing for bad news Thursday got at least a dose of something positive: Regulators eased up restrictions on risk-taking put forth following the financial crisis of 2008-09.

The Federal Deposit Insurance Corporation, the Federal Reserve, the Office of the Comptroller of the Currency, and other regulators finalized an overhaul of the so-called Volcker rule, imposed under the 2010 Dodd-Frank Act. It was meant to prevent banks from engaging in some of the risky behavior that contributed to the crisis, such as proprietary trading and making speculative, hedge fund-like investments.

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Jobless Claims Remain Stubbornly High as Covid-19 Spike Spooks Employers
A downward trend in first-time claims for unemployment insurance stalled in the latest week, showing how long it will take for tens of millions of jobless Americans to return to work as the coronavirus pandemic continues to rock the U.S. economy.

The Labor Department said Thursday that seasonally adjusted jobless claims were 1.5 million in the week ended June 20, little changed from the previous week’s level. Economists polled by FactSet expected a decline to 1.325 million.

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Transportation Orders Lead U.S. Durable Goods Higher
U.S. durable goods orders gained more than expected in May, the Commerce Department said Thursday, supported by renewed demand in the transportation sector as auto and aircraft factories began working again.

The 15.8% jump to $194.4 billion in goods reversed April’s plunge of 18.1 percent, which was revised even further downward in the May report. An 80.7% jump in transportation equipment orders to $46.9 billion led the index’s overall increase, ending two months of declines in the sector as plane maker Boeing and the Detroit car makers resumed production after shutting down due to the coronavirus.

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Scandal-Hit Wirecard Files for Insolvency
Stricken payments provider Wirecard said Thursday it is filing for insolvency, days after the high-profile German company admitted that 1.9 billion euros ($2.1 billion) were missing from its accounts.

It comes shortly after ex-CEO Markus Braun was detained before being freed on bail. He stands accused of market manipulation and falsifying the company’s accounts, in what is becoming one of Germany’s biggest financial scandals.

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Macy’s Steps Up Cost-Cutting With Plans to Lay Off 3,900
Macy’s said Thursday that it planned to lay off at least 3,900 workers in an effort to cut costs.

The struggling retailer says the job cuts are part of a restructuring that it expects to save $365 million in costs this year and $630 million of costs annually. The layoffs will be associated with $180 million of pretax cash costs; most of those costs will be recorded in the second quarter.

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Disney Stock Slips as Coronavirus Surge Delays Disneyland Reopening
Walt Disney stock is dropping following news that the opening of its California Disneyland location would be delayed in response to a rise in coronavirus cases in the state.

Disney had planned to open Disneyland on July 17, but the reopening is now pending approval from the state. California is among the states that are seeing a worrying resurgence of Covid-19 cases as it eases lockdown orders aimed at curbing the spread of the virus. This week, the state recorded its largest spike in cases yet, with more than 7,000 new infections.

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Moderna Is the Latest Coronavirus Vaccine Partner for Catalent
Moderna said it has teamed up with Catalent to make the Covid-19 vaccine that the biotech company is about to test in the country’s first large clinical trial.

Even though the vaccine’s large-scale safety and effectiveness has yet to be demonstrated, the urgency of the coronavirus pandemic is driving the companies to prepare production of 100 million doses by this year’s September quarter. In a press release, Moderna’s chief of technical operations Juan Andres said the production scale-up was proceeding with “unprecedented speed.”

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Tesla Flops in JD Power Initial Quality Survey
Luxury electric-vehicle maker Tesla didn’t produce a strong showing in its first appearance on JD Power’s annual initial quality study.

The survey looks at initial quality, calculated as the number of problems car owners have in the first 90 days of new-vehicle ownership. It collects information on tens of thousands of new vehicles to come up with the ranking. The top-performing auto brands in 2020 are Dodge and Kia, with 136 problems per 100 vehicles, or less than two problems per car. Tesla, on the other hand, made its debut at the bottom of the list among major auto makers, with 250 problems per 100 vehicles.

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Natural Gas Falls to 25-Year Low as Storage Inventories Rise
Natural gas prices are in free fall following a bearish report on inventories on Thursday, with futures poised to close at their lowest levels since 1995.

Natural gas futures were down 7.8% in midday trading, to $1.47 per million British thermal units. The last time natural gas closed below $1.50 was in August 1995, when it settled at $1.47. The lowest-ever price for natural gas is $1.05, which it hit in 1992. Thursday’s drop represents the fourth consecutive negative day for natural gas, which settled on Wednesday just under $1.60.

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SoftBank’s Masayoshi Son Steps Down From Alibaba Board
Alibaba Group Holding has announced that SoftBank Group founder and CEO Masayoshi Son has resigned from its board, effective immediately.

The timing of the move coincides with the previously announced decision by Alibaba co-founder Jack Ma to step off the SoftBank board, which is also effective Thursday. SoftBank will continue to have the right to appoint one person to the board of Alibaba, although the seat so far has been unfilled.

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