Traders wearing masks work inside posts, on the first day of in-person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020.
Brendan McDermid | Reuters
Tech stocks reasserted the leadership in early trading as the broader market fell for the second straight day. The Federal Reserve is slated to release its latest policy decision at 2 pm ET, with a press conference from Fed Chair Jerome Powell to follow.
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12:00 am: Markets at midday: Dow drops again ahead of Fed announcement
The Dow Jones Industrial Average built on its losses from the previous session, sliding more than 100 points, or 0.6% as traders braced for the Federal Reserve’s latest announcement on monetary policy. The S&P 500 also dipped 0.2%. The Nasdaq Composite bucked the negative trend by rising more than 0.6% and hitting a fresh record high. —Imbert
11:44 am: Mnuchin says more rescue legislation needed, but should be targeted and not rushed
Treasury Secretary Steven Mnuchin said Wednesday that he thinks Congress will need to inject more money into the U.S. economy to help support businesses, but added that future stimulus should be thoughtful and more tailored. Mnuchin, who spoke before the Senate Small Business Committee, said “I think at the point when we were in an emergency, we had to put a lot of money into the economy and we knew that it would not be perfection. …. Whatever we need to do going forward needs to be more targeted.” —Franck
11:32 am: Wells Fargo slides after CFO warns about loan loss reserves
Shares of Wells Fargo fell sharply after the bank’s chief financial officer said at a conference that bank expects another large build of loan loss reserves for the second quarter. The comments from CFO John Shrewsberry at the Morgan Stanley Virtual US Financials Conference are more pessimistic than Morgan Stanley CEO James Gorman’s statement on the topic on Tuesday. The stock was down roughly 6.7% for the session. —Pound, Giel
11:06 am: Tesla tops $1,000 a share for the first time ever
Tesla jumped more than 6% to an all-time high of $1,011.65, the first time the electric car-maker has crossed the $1,000 threshold. Wednesday’s gains added to its huge rally this year that saw the stock more than double. Its recent momentum was fueled by its electric vehicle sales data out of China that showed a recovery from the pandemic. Meanwhile, CEO Elon Musk is pushing the company to begin “volume production” of its Semi commercial truck, according to a memo obtained by CNBC. —Li
10:55 am: Some early opening areas are experiencing coronavirus issues
As the U.S. economy continues to reopen, some states that have been more aggressive in loosening restrictions imposed due to the coronavirus are seeing higher infection and hospitalization rates are drawing attention. Arizona and Texas both have witnessed climbs in cases and hospitalization rates. In Arizona, there were 618 new cases Tuesday, representing a 2.2% increase, though hospitalizations rose 0.8%, according to the Covid Tracking project. Texas saw 1,637 new cases, also a 2.2% gain, and 23 more deaths. Over the past seven days, the worst numbers are coming from Arizona, Arkansas, Florida, Georgia, Nevada, New Mexico, North and Sound Carolina, Oregon and Utah, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics. While rising testing levels are responsible in a few cases, “we expect the re-imposition of restrictions in some cities/states over the next few weeks,” Shepherdson. – Cox
10:30 am: Bankrupt names retreat after wild surges
Shares of bankrupt companies were down big in morning trading on Wednesday after a wild run fueled by speculation by retail investors. Car renter Hertz dropped 36%, while Whiting Petroleum and J.C. Penney plunged 31% and 26%. Chesapeake Energy, which is preparing for a bankruptcy filing, fell 30% after being halted for trading briefly. These names have seen their stock skyrocket in recent days as investors bet on a turnaround with the economic conditions improving suddenly. With Wednesday’s drop, shares of Hertz and Whiting are still up 180% and 130%, respectively, this month. However, many on Wall Street are warning against buying into those bankrupt names as equity holders are last in line for payout and typically get wiped out in bankruptcy. –Li
10:00 am: Starbucks falls on grim earnings outlook
Shares of Starbucks ticked 4% lower on Wednesday after the world’s largest coffee chain said it lost as much as $3.2 billion in sales in latest quarter due to coronavirus pandemic. Starbucks, which withdrew its prior outlook in April, is forecasting a net loss per share of 64 cents to 79 cents and adjusted losses per share of 55 cents to 70 cents for quarter ending June 28. For the full fiscal year, the company expects same-store sales in its two largest markets — the United States and China — to decline 10% to 20%. Starbucks does expect earnings to improve in the fourth quarter. — FItzgerald
9:55 am: Here are Wednesday’s biggest analyst calls of the day: Tesla, Alphabet, Chevron, airlines & more
- JPMorgan downgraded JetBlue to underweight from neutral and United Airlines to neutral from overweight.
- Jefferies upgraded Etsy to buy from hold.
- Baird downgraded Cisco to neutral from outperform.
- RBC downgraded Chevron to underperform from sector perform.
- Wedbush downgraded Micron to neutral from outperform.
- Wedbush raised its price target on Tesla to $1000 from $800.
- Bank of America raised its price target on Alphabet to $1,610 from $1,420.
Pro subscribers read more here. — Bloom
9:43 am: Amazon, Apple and Facebook hit fresh all-time highs
Tech shares reasserted their leadership on Wednesday, lifting the Nasdaq Composite to an intraday high of 10,027.50. Apple rose 1.3% in morning trading to a fresh record of $349.35 a share. E-commerce giant Amazon jumped another 2%, hitting an all-time high of $2,653.71. Facebook also refreshed its record, rising 0.6% on Wednesday. –-Li
9:40 am: Five Below soars after earnings
Shares of Five Below rose more than 11% on Wednesday after the company reported earnings for its fiscal first quarter and gave updates about business at its reopened stores. The company missed on the top and bottom lines for the quarter, but several Wall Street analysts cited the companies sales trends in the second quarter as a reason for optimism. The discount retailer’s CEO said on an investor call that comparable sales are up 8% in the second quarter so far, according to a transcript from FactSet. About 90% of the company’s stores have now reopened, and Five Below said it still plans to open 100 or more new stores this year. —Pound
9:31 am: S&P 500 opens slightly higher, tech leads Nasdaq to another record
The S&P 500 started Wednesday’s session in the green, gaining about 0.2%. The Nasdaq Composite rose 0.2% to another all-time high as megacap tech built on its strong momentum. The Dow Jones Industrial Average was flat at the open as a drop in Boeing shares weighed on the benchmark –Li
9:20 am: Inflation dipped slightly in May
The consumer price index fell 0.1% in May, marking the third straight month of declines, Labor Department data showed Friday. The slight dip came after a 0.8% plunge in April amid the pandemic, which was the largest decline since December 2008. Excluding the volatile food and energy components, the so-called core CPI fell 0.1% in May after dropping 0.4% in April, the largest decline since the series started in 1957. “I still believe that with screwed up supply chains and a lot of capacity taken off line, as demand rebounds over the next 6-12 months, along with an extraordinary amount of monetary tinder, inflation will come our way,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note. –Li
8:20 am: Fed to release economic projections after meeting
Federal Reserve officials will indicate where they see GDP, unemployment and inflation heading as the U.S. begins its recovery from the coronavirus pandemic. As the Federal Open Market Committee wraps up its two-day meeting Wednesday, markets are expecting little in the way of policy changes, but will get to see how policymakers see the recovery unfolding. In addition, the Fed will release its “dot plot” of individual members’ projections for interest rates. While there likely won’t be any shifts soon, the plot will give an indication on whether members see negative rates as a possibility. Chairman Jerome Powell will hold a news conference afterwards. –Cox
8:17 am: Bank of America raises price target on Alphabet, Facebook
Tech has been leading the market higher, and Bank of America believes these names will continue to outperform. On Wednesday the firm raised its target on Alphabet to $1,610 from $1,420 based on ad revenue and monetization trends. The new target is about 11% above where the stock currently trades. When it comes to Facebook, the firm believes the company “has strong ability to capitalize on the surge in usage seen during shelter in place orders.” The firm’s new $265 target represents 11% upside. Bank of America also raised its target on Pinterest to $24 to $22, and on Snap from $20 to $24. –Stevens
8:14 am: Tesla rises on report of scaling Semi truck production
7:52 am: Tech stocks rising again
Major tech stocks moved higher in premarket trading, continuing a strong rally for the sector that pushed the Nasdaq Composite above 10,000 briefly on Tuesday. Facebook, Amazon and Apple rose more than 1% in premarket trading, while Alphabet and Netflix posted smaller gains. —Pound
7:35 am: United and JetBlue downgraded at JPMorgan, rally can’t last ‘much longer’
7:30 am: Dow futures dip ahead of Fed announcement, but Nasdaq set for more gains
Dow Jones Industrial Average futures fell 48 points, or 0.2%, as traders braced for an upcoming monetary policy announcement from the Federal Reserve. S&P 500 futures were also little changed. Nasdaq-100 futures, however, rose 0.5% as shares of Facebook, Amazon, Apple and Netflix traded higher in the premarket. Both the Nasdaq-100 and Nasdaq Composite are coming off record-setting sessions, with both averages breaking above 10,000 for the first time on Tuesday. —Imbert
—With reporting from Jeff Cox, Yun Li, Maggie Fitzgerald, Dawn Giel and Michael Bloom.
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