Traders wear masks as they work on the floor of the New York Stock Exchange as the outbreak of the coronavirus disease (COVID-19) continues New York, May 27, 2020.
Lucas Jackson | Reuters
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10:44 am: Market sell-off accelerates as Texas rolls back reopening
Stocks tumbled to their lows of the day around mid-morning, with the Dow sliding more than 600 points, after Texas Gov. Greg Abbott said the state would roll back some reopening measures. “At this time, it is clear that the rise in cases is largely driven by certain types of activities, including Texans congregating in bars,” Abbott said in a release. Friday’s steep losses put the Dow and S&P 500 down more than 2% each for the week. —Imbert
10:18 am: Wells Fargo and Capital One tumble after Morgan Stanley says banks have to slash dividends
Shares of Wells Fargo and Capital One tumbled after Morgan Stanley analyst Betsy Graseck said they may be forced to cut their dividends after the Federal Reserve stress test introduced a new rule governing the quarterly payouts.
The Fed released the results of its annual bank exam Thursday, revealing a new formula for dividend payouts that dictates that a lender’s dividend cannot exceed its average net income from the previous four quarters.
Based on Graseck’s estimates for second-quarter earnings, that means Wells Fargo would need to cut its third-quarter dividend to $0.36 from $0.51, and Capital One would have to slash it to zero, from its current $0.40, the bank analyst wrote Friday in a research report. Shares of Wells Fargo tumbled 4.4% shortly after the open of trading in New York, while Capital One fell 3.5%.
10:15 am: Reopening trades drop
Shares of companies most sensitive to the economy’s reopening, including airlines and cruise lines, moved lower on Friday as Covid-19 cases continue to rise in the U.S. Royal Caribbean and Norwegian Cruise Line fell around 3% each, while Carnival Corporation slid 1%. United Airlines dropped more than 5%, while Delta and American were down 3% and 4%, respectively. Casino names also took a hit, with Las Vegas Sands and MGM tumbling more than 2%. – Stevens
10:05 am: Virgin Galactic stock rises after successful test flight
Shares of Virgin Galactic opened up as much as 5.6% in trading before slipping, after the space tourism company successfully completed its second glide flight test in New Mexico on Thursday. Virgin Galactic said that, after completing “an extensive data review” of the glide flight, it will begin preparing for full rocket-powered test flights. – Sheetz
10:02 am: Texas governor rolls back reopening after virus spike
Texas Gov. Greg Abbott announced Friday morning that the state is reinstating restrictions on some businesses after the spread of the coronavirus accelerated recently in the state. Under the new rules, bars are closed to in-person customers, while restaurants cannot exceed 50% capacity starting on Monday. Additionally, rafting and tubing businesses must close and local governments must approve outdoor gatherings of more than 100 people. —Pound
9:30 am: Stocks open lower, Dow drops more than 100 points
The major averages moved lower at the opening bell as bank stocks weighed on the broader market. The Dow dropped 186 points for a loss of 7%. The S&P 500 and Nasdaq Composite were down 0.45% and 0.24%, respectively. The Dow and S&P are on track to end the week lower, while the Nasdaq is set to eke out a small gain. – Stevens
8:57 am: Here are Friday’s biggest analyst calls of the day: Amazon, Qualcomm, Snap, Boeing & more
- SunTrust raised its price target on Amazon to $3,400 from $2,700.
- Deutsche Bank upgraded eBay to buy from hold.
- Bernstein downgraded Boeing to market perform from outperform.
- Rosenblatt initiated DraftKings as buy.
- Wells Fargo raised its price target on Snap to $28 from $20.
- Evercore ISI named Qualcomm a top pick.
- Deutsche Bank raised its price target on Amazon to $3,333 from $2,750.
8:40 am: Gap jumps 15% after inking deal with Kanye West
Shares of Gap surged more than 15% in premarket trading after the company announced a partnership with musician Kanye West. West tweeted out a promotional photo that had “developed by Yeezy and Gap” written on a bag. He also tweeted about the partnership using the hashtag #WestDayEver. The Yeezy-Gap line will be aimed at young shoppers, according to Reuters. —Pound
8:32 am: Boeing downgraded by Bernstein
Bernstein downgraded shares of Boeing to market perform on Friday based on a lower delivery outlook over the long-term. The firm pointed to uncertainty around when the 737 Max will return to the sky, as well as questions around what the company’s production ramp will look like once operations resume. “To reflect this uncertainty around the demand environment and return timeline, we have reduced our 2020 deliveries forecast from 80 to 40, and assumed a slower delivery and production ramp in 2021 and beyond,” the firm said. Bernstein also cut its full-year 2020 to 2024 free cash flow estimates for the company by around $9.5 billion. Shares of Boeing slid 1% during premarket trading. For the year, the stock is down 46%. – Stevens
8:06 am: Bank stocks fall as Fed imposes restrictions on dividends
On Thursday the Federal Reserve imposed new restrictions on U.S. banks after its annual stress test found that several banks could get uncomfortably close to minimum capital levels in scenarios tied to the coronavirus pandemic. The Fed said in a release that big banks will be required to suspend share buybacks and cap dividend payments at their current level for the third quarter of this year. The regulator also said that it would only allow dividends to be paid based on a formula tied to a bank’s recent earnings. Shares of Wells Fargo slid more than 2% during premarket trading, while JPMorgan and Bank of America were each down more than 1%. Goldman Sachs was more than 3% lower. – Son, Stevens
7:43 am: Nike drops as company reports surprise loss
Shares of Nike slid more than 3% during premarket trading after the company reported a surprise loss for the fourth quarter as sales fell 38% year-over-year. Street analysts had expected the sportswear maker to report a profit of 7 cents per share, but the company instead lost 51 cents per share. By comparison, in the fourth quarter of 2019 the company earned 62 cents per share. Revenue also came up short as stores were forced to close amid the pandemic. Digital sales did jump 75%, but expenses for shipping and returns cut into margins. – Stevens
7:14: Stock futures point to mixed open
U.S. stock index futures pointed to a mixed open for the major averages on the final trading day of a volatile week. The Dow Jones Industrial Average was set to shed 40 points at the open, while the S&P 500 and Nasdaq-100 were set to rise 0.1% and 0.2%, respectively. Bank stocks weighed on the market after the Federal Reserve imposed restrictions on bank dividends following its annual stress test. During Thursday’s session the sector had rallied after the Federal Deposit Insurance Commission officials said they were loosening some restrictions on the Volcker Rule.
Elsewhere in the market, stocks most sensitive to the economy’s reopening, including airlines and cruise lines, moved higher, despite Texas and Florida pausing their reopening efforts as the number of Covid-19 cases in the states jump.
For the week, the S&P and Dow are slated to register their second weekly loss in three weeks, while the Nasdaq Composite is on track to end the week higher. – Stevens
– With reporting from CNBC’s Hugh Son, Michael Sheetz and Michael Bloom.
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Published at Fri, 26 Jun 2020 14:45:04 +0000-Stock market live updates: Dow drops 500, TX reverses reopen, Gap jumps 30% on Kanye collab