Market Brief: May 20, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Wednesday, May 20, 2020
Retail Rally. The S&P 500 rallied to close at a 10-week high Wednesday, following upbeat quarterly results from retailers Target and Lowe’s, as investors focused on American businesses reopening with the coronavirus pandemic beginning to recede. The Dow Jones Industrial Average closed up nearly 370 points, or 1.5%, at about 24,576, a day after the blue-chip index skidded 390-points in the last hour of trade. The S&P 500 index gained 1.7% to about 2972, finishing at its highest level since March 6, according to FactSet data. Meanwhile, the Nasdaq Composite Index advanced 2.1% to about 9376. The small-capitalization Russell 200 index finished up 2.8%, underlining the broad-based rally. Lowe’s Cos. reported sales and profit significantly above expectations, while Target beat estimates on revenue and sales growth, with digital sales soaring 141%.
DJIA 24,575.90 369.04
S&P 500 2,971.61 48.67
NASDAQ 9,375.78 190.67
US 10-Year Note 0.69 -0.01
Dollar Index 99.18 -0.19
Crude Oil 33.62 1.66
Gold 1,751.30 5.70
Global Dow 2,673.31 37.67
Powered by Dow Jones Research, FactSet, Eurostat, SIX Financial Information.
Target Earnings Beat Expectations. Walmart Wasn’t a Tough Act to Follow After All.
Target stock traded lower Wednesday even though the big-box retailer reported fiscal first-quarter earnings that exceeded expectations. Target said it earned 59 cents a share on revenue of $19.37 billion. Analysts were expecting earnings per share of 40 cents on revenue of $19.04 billion.

Comparable sales climbed 10.8% in the quarter, and, as we’ve seen with other retailers, average basket size jumped 12.5%, as shoppers chose to make less frequent, bigger trips. Digital comparable sales soared 141%, making up nearly 10 percentage points of the quarter’s comparable sales growth. Same-day delivery was up 278%.

Continue reading ›
Lowe’s Reports an Earnings Beat Because It Did What Home Depot Couldn’t
Home-improvement retailer Lowe’s said it earned $1.77 a share on revenue of $19.68 billion in its fiscal first quarter. Analysts were expecting earnings per share of $1.32 on revenue of $18.33 billion.

Overall comparable sales climbed 11.2% during the quarter, while comparable sales in its U.S. home-improvement category climbed 12.3%. The company said website orders surged 80%. Rival Home Depot reported earnings on Tuesday, and although its same-store sales surged, it missed earnings estimates largely because of Covid-19-related expenses.

Continue reading ›
Urban Outfitters’ Online Sales Come Up Short
Urban Outfitters stock tumbled on Wednesday morning, following disappointing first-quarter earnings. The retailer said it lost $1.41 a share on revenue of $588.5 million. Analysts were expecting a loss of 26 cents per share on revenue of $637.99 million.

Comparable sales for the company’s main retail segment slipped 28%: Given its focus on apparel and accessories, and its presence in some malls, Urban Outfitters wasn’t able to stay open during the crisis. While digital sales were up double digits, it wasn’t enough to offset the losses from forced closures.

Continue reading ›
Fed Minutes Outline Potential Next Steps to Fight Pandemic Crisis
The Federal Reserve on Wednesday gave investors some clues about what officials have in mind to further support the U.S. economy as the coronavirus pandemic continues to claim jobs, freeze output, and weigh on markets.

Minutes from the April 28-29 meeting of the Federal Open Market Committee—the Fed’s policy-setting arm—highlight ongoing cloudiness over the economic outlook. “Uncertainty regarding the economic effects of the coronavirus outbreak was extremely elevated,” the minutes say, adding that the historical behavior of the U.S. economy in response to past economic shocks provides limited guidance for making judgments about how the economy might evolve over coming quarters.

Continue reading ›
Facebook Unveils New E-Commerce Push
Facebook shares soared to a record high on Wednesday on investor enthusiasm for the company’s announcement of a new e-commerce platform called Facebook Shops, and a similar program to launch later this year called Instagram Shops.

Facebook has dabbled in e-commerce before, but this time the company’s timing seems exactly right, with many small businesses either closed entirely or struggling to survive in the face of the Covid-19-related economic crisis. The move creates a new competitive front with and other online retailers, while also boosting the case for small businesses to buy advertising on the platform.

Continue reading ›
Contact Tracing for Coronavirus Takes High-Tech Step Forward
High-tech contact tracing—which uses peoples’ smartphones to track the spread of coronavirus—is a moving a little closer to reality.

Google parent Alphabet and Apple announced the release of an API, short for application programming interface, for a so-called “Exposure Notifications System.” With the API, health agencies can begin launching apps that use the system to notify smartphone users when someone they’ve been in contact with has contracted Covid-19.

Continue reading ›
Luckin Coffee Stock, Facing Delisting, Begins Trading Again. It Isn’t Pretty.
Shares of Luckin Coffee resumed trading Wednesday after being halted for six weeks, and they quickly plummeted.

Luckin’s American depositary receipts were trading at $2.85 Wednesday morning, tumbling by 35% from their closing price of $4.39 on April 6 before trading was suspended by Nasdaq. Before the halt, shares had dropped 89% this year. The exchange has informed Luckin of its plan to delist the stock due to “public interest concerns” related to fabricated transactions disclosed by the company in its financial reports, as well as past failure to publicly disclose material information.

Continue reading ›
Another Biotech Stock Gets a Lift From Encouraging, but Early, Vaccine Data
Early data show that Inovio Pharmaceuticals’ experimental vaccine triggered immune responses against the Covid-19 virus in lab animals.

The study results published Wednesday in the science journal Nature lifted Inovio stock 8.2% to $15.76 near midday—echoing the enthusiasm that swept up shares of rival Moderna on Monday, when that company released an encouraging bit of data on the first eight Americans vaccinated in a Phase 1 clinical trial. That enthusiasm had a short half-life.

Continue reading ›
Halliburton Joins the Oil-Patch Crowd With a Dividend Cut
Halliburton became the latest energy company to cut its dividend on Wednesday, joining fellow oil services provider Schlumberger in slashing its payout by 75%. The dividend is dropping to 18 cents per share from 72 cents, while the stock’s dividend yield will fall from 6.5% to 1.6%.

The move adds urgency to a question that investors have already begun to ask about other industry players: If oil companies don’t pay big dividends, what’s the point of owning their stocks? Absent more drastic industry restructuring, there isn’t a compelling case to buy most of them.

Continue reading ›
Royal Caribbean Posts a Big Loss and Steep Drop in Revenue From Coronavirus Impact
As expected, Royal Caribbean Cruises posted a big first-quarter loss due to the continuing effects of the coronavirus pandemic.

Royal Caribbean, the second-largest cruise operator, said it lost $6.91 a share in the first quarter, compared with per-share earnings of $1.31 a year earlier. That result includes a $1.1 billion impairment charge. On an adjusted basis, which excludes the impairment, the company lost $1.48 a share, versus earning $1.31 a share in the corresponding period last year. Revenue fell some 17% to about $2 billion.

Continue reading ›
Dow Jones Contact Us
| Privacy Policy
| Cookie Policy
4300 Route 1 North, South Brunswick, NJ 08852
Copyright ©
2020 Dow Jones & Company, Inc. All Rights Reserved. Not for redistribution.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market or economic conditions.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.