The stock market began the week in the red as coronavirus cases continued to rise in parts of the United States and Beijing reinstated some restrictions after a new outbreak in the Chinese capital. However stocks reversed their downward spiral and traded higher, helped by the Federal Reserve announcement that it will start buying individual corporate bonds.
This is a live blog. Check back for updates.
3:43 Dow turns negative
The Dow slipped back into negative territory with less than half an hour before the market closes as Monday’s rally softened. The index last traded down 57 points, or 0.2%. The S&P 500 and the Nasdaq were still showing gains for the day. —Pound
3:00 pm: Final hour of trading: Fed announcement sends stocks surging into the close
With roughly one hour left in the trading session, the major averages were headed for solid gains after the Fed said it would buy corporate bonds in individual companies, expanding its efforts to backstop the markets amid the coronavirus pandemic. The Dow traded 150 points higher, or 0.6%, while the S&P 500 was up 0.8%. The Nasdaq Composite gained 1.5%. —Imbert
2:26 pm: Fed move to buy corporate bonds adds to rally
The Federal Reserve will start buying individual corporate bonds on top of the ETFs it already is purchasing. In an expansion to its Secondary Market Corporate Credit Facility, the Fed said it will purchase eligible company debt with remaining maturities of 5 years or less. That will go along with the previous high-profile intent to buy ETFs that track both investment grade and junk debt. The broader goal is “to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds,” the Fed said in a news release.” Markets rallied strongly on the news, adding to a nearly 1,000-point reversal in the Dow industrials. The iShares iBoxx $ Investment Grade Corporate Bond spiked to a 52-week high on the news. BlackRock is both running the facility for the Fed and is the parent of the iShares ETF family. – Cox
1:40 pm: Car rental company Hertz says it expects stockholders to lose all their money
Hertz shares fell more than 20% on Monday after the car rental company warned in a government filing that it expects its stockholders to lose all their money even as it seeks a last-ditch equity sale to raise $500 million. Hertz, which is the middle of Chapter 11 bankruptcy proceedings, said its stock will be worthless unless those with higher priority in a bankruptcy, such as the company’s debtholders, are paid in full. Further, Hertz sees bondholders being paid in full only if there is “a significant and rapid and currently unanticipated improvement in business conditions to pre-COVID-19 or close to pre-COVID-19 levels.” — Franck
1:35 pm: Stock that have gained the most from the opening bell
A huge reversal in stocks occurred on Monday bringing all three major average into positive territory. A handful of stocks — some airlines, cruise lines and casinos — opened in negative territory and have now made back some if not all of their losses. Norwegian Cruise Lines and Royal Caribbean have both rallied 9% from their opening prices. MGM Resorts and American Airlines have also rallied about 9% from their levels earlier in the day. The Williams Companies and DexCom jumped about 8.9% from their earlier prices.— Fitzgerald
1:15 pm: Dow, S&P 500 follow Nasdaq into positive territory
Stocks clawed back of their earlier losses, bring all three major average into the green on Monday. The Dow Jones Industrial Average, which earlier dropped 762 points, traded briefly positive. The S&P 500 is now up 0.16% and the Nasdaq Composite gained 0.74%. — Fitzgerald
1:10 pm: FedEx delays earnings by a week
Shipping company FedEx said it will delay its earnings release by a week due to the coronavirus. The corporation will release its fourth quarter fiscal year 2020 results after market close on June 30, instead of June 23. The company cited “COVID-19 pandemic and ongoing ‘shelter in place’ requirements” for the delay. – Hum, Fitzgerald
12:40 pm: DocuSign jumps as it prepares to enter Nasdaq-100
Shares of cloud company DocuSign rose more than 5% on Monday following an announcement by Nasdaq last week that the stock would replace United Airlines in the Nasdaq-100 index. The stock will officially join the index on June 22. —Pound, Novet
12:32 pm: Fed’s Kaplan: We’ll grow faster if we keep fighting coronavirus
With aggressive fiscal and monetary policy already in place, the critical next step in the economic recovery will be the way the public responds to measures to prevent another big surge of coronavirus cases, Dallas Fed President Robert Kaplan said Monday. “There is no dichotomy, no disconnect between good health care procedures and growth. They go together. The better we do those things, the faster we grow,” Kaplan said. The central banker noted “uneven” compliance with social distancing in areas that have reopened. “If people wear masks widely, if we have extensive testing and contact tracing, if business and individuals follow good procedures, we’re going to grow faster,” Kaplan added. Texas was one of the early opening states and recently has seen a surge in cases. On a separate issue, Kaplan said he is going to spend the summer looking at economic data and evaluating the Fed’s next policy move. On one widely discussed option, buying bonds to cap yields at certain points on the duration curve, he expressed some skepticism. “I worry about going too far in terms of distorting the pricing mechanism of the Treasury curve. I’m not saying we shouldn’t do it, but I’d have to see some evidence that there’s reason to do it,” he said. –Cox
12:15 pm: Markets at midday: Nasdaq pushes into positive territory
The tech-heavy Nasdaq erased its early losses and is now up roughly 0.2% for the day. Some of the biggest gains in the index have come from DexCom, Zoom Video and Electronic Arts. Facebook and Netflix were also trading in positive territory. The Dow and S&P 500 also cut their losses and are down less than 1% for the day. —Pound
11:29 am: Stocks trim losses as midday approaches
The market cut some of its early losses, with the S&P 500 now down 0.8%. The Dow, which fell 762 points earlier, rebounded to trade roughly 320 points in the red and is down 1.2% for the day. Breadth has improved, with more than 100 stocks in the S&P 500 now positive for the day, including Morgan Stanley, Kellogg and United Parcel Service. —Pound
11:00 am: Bank of America raises price target on Disney, says company will ‘grow stronger’ through the crisis
As the economy reopens, Disney “shares offer a compelling entry point for best-in-class assets with an attractive risk/reward profile that is skewed to the upside by a factor of 3:1,” Bank of America analyst Jessica Reif Ehrlich said. The firm upped its price target to $146 per share from $123 on Monday, noting that although the coronavirus will “continue to weigh on near-term financials, we believe DIS is well positioned to grow stronger through the crisis and numerous catalysts exist to drive growth higher.” Shares are down 2% this month. —Bloom
10:30 am: Cramer says Hertz stock is likely ‘worth zero’
10:28 am: Fed’s Main Street lending program accepting bank registrations
Banks wanting to get in on the Federal Reserve’s Main Street lending program can start signing up now. The Boston Fed, which will administer the facility, said Monday that it is now open for lender registration. After a lengthy delay that saw significant changes to the initially announced terms, the Main Street program, which targets small- and medium-sized businesses with loans of $250,000 to $300 million, is expected to be launched shortly. The Fed will purchase 95% of the loans from participating banks, a number that also has increased from the first announcement. –Cox
10:14 am: Retailers under pressure as virus fears rise
Shares of retailers were among the biggest losers in morning trading after signs of a second wave of the coronavirus emerged. Kohl’s and Macy’s both dropped more than 5%, while Nordstrom and Gap dipped 3.6% and 4.5%, respectively. Simon Property Group, one of the largest owners of U.S. malls, fell 5.4%. These names had rebounded sharply as they started the reopening process, but worries about a virus resurgence dented the appeal of brick and mortar retailers. – Li
10:11 am: United leverages loyalty program into a $5 billion loan
United Airlines announced on Monday that its using its MileagePlus program to secure a $5 billion loan to help it withstand the drop in demand due to the coronavirus pandemic. The program generated $5.3 billion in cash flow from sales in 2019, before the virus hit, according to a securities filing. The loan will give the airline roughly $17 billion in liquidity by the end of the third quarter. The stock was down 7% in early trading, similar to other airlines. — Pound
10:02 am: VIX above 40 again as volatility surges
The Cboe Volatility Index, also known as the VIX or “fear gauge,” popped more than 11% to trade at 40.33 in morning trading Monday. The VIX tracks the 30-day implied volatility of the S&P 500 futures via options prices. On Thursday, the gauge crossed the 40 threshold for the first time since May 4. The VIX hit a record high of 82.69 on March 16 during the historic sell-off amid the coronavirus pandemic. –Li
10:00 am: American, Delta lead airline stocks lower amid virus concerns
Shares of United and American Airlines, down 6.5% and 5.2%, lead the airlines lower on Monday as inflamed coronavirus fears weighed on both transportation stocks and the broader U.S. equity market. The airline group outperformed the broader market during much of May as investors grew hopeful about the U.S. economy reopening, but are now lagging as Covid-19 concerns return. Alaska Air and JetBlue each dropped about 4% while Southwest Airlines lost 3%. The broader Dow Jones Transportation Average, which tracks the performance of 20 of the largest transportation-related stocks in the U.S., fell 2%. — Franck
9:55 am: Cruise lines fall on second wave fears
Shares of cruise line operators dropped on Monday as investors ditched riskier stocks on concerns about a second coronavirus wave. Shares of Norwegian Cruise Line fell 6.5% and shares of Carnival Corp. dropped 5.5%. Royal Caribbean ticked 4.6% lower. All three stocks have seen a major run-up from the March low. – Fitzgerald
9:54 am: Bank stocks move lower
The S&P financials sector shed 2.65% in early trading on Monday with every component in the red, as fears over a possible second wave of coronavirus cases hammered the sector. Citigroup slid 4%, while JPMorgan, Bank of America, and Wells Fargo were each down more than 3%. The group is also taking a hit after the Federal Reserve said last week that it has no intention of raising rates any time soon. Banks typically benefit when rates are higher since it widens the spread between how much they pay to borrow compared with their profits from loans. – Stevens
9:50 am: Just 9 stocks in the entire S&P 500 are higher
Wall Street got off to a torrid start to the week as investors grow concerned over the possibility of a second coronavirus wave. Early trading action showed just nine stocks in the entire S&P 500 were positive. Electronic Arts, Twitter, Clorox and Dollar General were among the names in the green. Market breadth was also extremely downbeat at the exchange level. FactSet data showed that just one New York Stock Exchange-listed name traded higher for every 13 decliners. —Imbert
9:30 am: Stocks tank, Dow drops more than 600 points
Stocks started the week sharply lower as the recent pullback continued. The Dow Jones Industrial Average fell 645 points for a loss of 2.5%. The S&P 500 was down 2%, while the Nasdaq Composite shed 1.5%. The major averages are all coming off their worst week since March 20 as fears over a second wave of coronavirus cases hit the market. Stocks most sensitive to the economy’s reopening, including airlines and cruise line operators, led the declines. – Stevens
9:29 am: New York manufacturing outlook best since financial crisis
Manufacturing in the New York area has seen a surprising rebound in June as confidence in the future hit its highest level in nearly 11 years. The New York Fed’s Empire State Manufacturing Index posted a reading of -0.2 for the month. While that represents a relatively standstill in present conditions, it was far better than the -35 that economists surveyed by Dow Jones had expected. At the same time, the index for future expectations rose to 56.5, its highest level since October 2009. Big gains also came in new orders, shipments and prices paid. – Cox
9:21 am: Here are the biggest analyst calls of the day: Starbucks, Shopify, Intel, airlines & more
- KeyBanc upgraded Intel to overweight from sector weight.
- Atlantic Equities initiated Starbucks as overweight.
- Piper Sandler upgraded Shopify to overweight from neutral.
- B. Riley FBR upgraded Six Flags to buy from hold.
- Berenberg upgraded Mondelez to buy from hold.
- Citi opened a 30-day negative catalyst watch on American Airlines & a positive catalyst watch on United Airlines.
- Loop Capital upgraded RH to buy from hold.
8:34 am: UBS strategist says stocks have more room to run higher
Stocks have been under pressure in recent days, but UBS’ Mark Haefele thinks more gains lie ahead. We are still confident that with positive medical developments and supportive stimulus measures, economies will be able to reopen sustainably without a second wave of infection overwhelming healthcare systems,” Haefele, CIO for UBS Global Wealth Management, said in a note. “We think there is still room for equities to move higher in both our central and upside scenarios.” Haefele added, however, that Thursday’s sell-off highlights “the importance of a selective approach to stocks after the recent sharp rally.” —Imbert
8:19 am: Fears of a second covid wave still spooking markets
While coronavirus cases have moderated across the U.S. as a whole, flareups in states that relaxed restrictions early are causing concern of a second wave. Total positives rose 1% on Sunday while deaths rose 0.3% to 109,657, according to the Covid Tracking Project. While those numbers reflect a continued taming of trends from when the pandemic first hit, some states are seeing significant jumps. Alabama saw a 4.1% rise in total cases on Sunday, Arizona rose 3.6% and Tennessee rose 3%. Those gains were being largely offset by sharp declines in the pace of growth among Northeast states, but the threat of a rise in cases still spooked markets. Wall Street was headed for another rough opening Monday coming off a sharp drop last week. – Cox
7:50 am: Retailers tick lower on second wave fears
Shares of brick and mortar retailers fell in premarket trading on Monday as worries about a spike in virus cases kept investors away from the reopening trade. Shares of Kohl’s ticked 6.5% lower and TJX Companies fell nearly 3%. Nordstrom lost 4.7%. Macy’s fell 5.5% and Best Buy shed more than 2% lower. Home Depot and Lowe’s fell 2.4% and 1.7%, respectively.— Fitzgerald
7:47 am: Shopify rises after Walmart partnership, upgrade
Shares of e-commerce company Shopify gained 3% in premarket trading after Walmart announced a partnership between the two companies that will allow Shopify’s third-party sellers to list their products on Walmart’s website. Piper Sandler also upgraded the stock to overweight from neutral, saying in a note that Shopify’s revenues could quadruple by 2025. —Pound
7:45 am: Moderna shares jump on report Israel to buy coronavirus vaccine
A report from Israeli news outlet YNET said the country was in talks to buy Moderna’s coronavirus vaccine, which is entering the final stage of testing. The report sent Moderna shares more than 5% higher in premarket trading. —Imbert
7:42 am: Morgan Stanley raises S&P forecast, says recovery will be V-shaped
Morgan Stanley’s U.S. equity strategist Michael Wilson raised his S&P 500 target while reiterating his belief that the recovery will be V-shaped based on positive economic data and policy action from governments and central banks. “We remain firmly in the camp that the economy is likely to experience a V-shaped recovery, which is exactly what the equity market is foreshadowing,” he wrote in a note to clients Sunday. Wilson raised his 12-month S&P 500 bull, base and bear targets to 3,700, 3,350 and 2,900, respectively. The S&P closed at 3,041 on Friday. – Stevens
7:39 am: Cruise lines fall as fears of a second coronavirus wave increase
Cruise line stocks took a hit on Monday as investors dumped the recently strong-performing group amid worries of a second coronavirus wave slowing down global travel. Carnival Corp. and Royal Caribbean both fell around 8% in the premarket. Norwegian Cruise Line slid 10.8%. Cruise operators have been on fire this quarter as traders be the worst of the coronavirus pandemic had passed. Quarter to date, Carnival is up 51.7% while Norwegian Cruise Line and Royal Caribbean are both up at least 87% in that time period. — Imbert
7:36 am: Coronavirus returns to Beijing
Officials in China’s capital city have reported 79 new cases of the coronavirus over the past four days after reporting no new cases for nearly two months. Parts of Beijing are now under lockdown to help control the spread of the virus, and the city has suspended sporting events and tourism. The outbreak has been linked to the Xinfadi market in the southwest part of the city. —Pound, Reuters
7:35 am: US airline stocks sink as virus fears threaten reopening trade
Shares of major U.S. airline companies fell across the board in premarket trading Monday morning as inflamed fears about a second wave of coronavirus cases continued to threaten the market’s recent optimism about economic reopening. Delta, United and Alaska Air fell 7%, 8.7% and 6.8%, respectively, underperforming S&P 500 futures that pointed to a slide of 2.1% for the broader market when regular trading resumes. JetBlue Airways and Southwest Airlines dropped 7.3% and 6.1%. — Franck
7:20 am: Dow futures drop more than 600 points
U.S. equities futures fell on Monday as investors ditched riskier assets over fears about a possible second wave of the coronavirus. Dow Jones Industrial Average futures fell about 600 points, or 2.4%. S&P 500 futures lost 2%. Nasdaq-100 futures declined 1.4%. Stocks that hinge on the economy reopening — airlines, cruise lines and retailers — were the weakest before the bell on Monday.
Stocks are coming off of their worst week since March. Equities reversed course last week after chugging higher for three straight weeks. The Dow and S&P 500 lost 5.5% and 4.7% last week, respectively, while the Nasdaq shed 2.3%. — Fitzgerald
— with reporting from CNBC’s Fred Imbert, Pippa Stevens, Jeff Cox, Yun Li, Jordan and Michael Bloom.
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