Stocks rally as slow coronavirus-relief talks move in 'right direction'

By Jonathan GarberFOXBusiness

Microsoft has until Sept. 15 to strike a deal for TikTok's US operations

U.S. equity markets rallied Tuesday morning after a Democratic negotiator said deadlocked Congressional talks on coronavirus relief, including extra unemployment benefits that boosted the economy before running out last month, were moving in the "right direction."

The Dow Jones Industrial Average gained 123 points, or 0.46 percent, while the S&P 500 gained 0.17 percent. The tech-heavy Nasdaq touched a record high before dipping back into the red late in the morning.

An all-time high at closing would be the Nasdaq's 30th of the year and 156th under President Trump.

Ticker	Security	Last	Change	Change %
I:COMP	NASDAQ COMPOSITE INDEX	10895.760821	-7.04	-0.06%
SP500	S&P 500	3298.32	+3.71	+0.11%
I:DJI	DOW JONES AVERAGES	26736.93	+72.53	+0.27%

Democrats and Republicans "remain far apart on a number of issues. But we're finally moving in the right direction," Minority Leader Chuck Schumer, the Senate's top Democrat, said on the chamber floor, according to Reuters. "At the moment, the gap between our two parties in the negotiations is about priorities and about scale."

Lawmakers are set to resume talks at 3:30 p.m. ET, the news service reported.

Treasury Secretary Steven Mnuchin said after talks on Monday that negotiators made a “little bit of progress,” but were divided on key issues including an extra $600-per-week unemployment benefit that supplemented state payouts.

GOP leaders want to cut the payment to $200, arguing that the higher amount prompts lower-paid workers not to return to their jobs.

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Looking at stocks, Ford CEO Jim Hackett has stepped down effective Oct. 1 and will be replaced by COO Jim Farley. Shares of the automaker had fallen 40 percent through Monday since Hackett took over as CEO more than three years ago,

Microsoft shares remain in focus as the company continues talks with China-based Bytedance for the U.S. operations of social-media app TikTok. Trump, who has threatened to ban the popular app in the U.S., said on Monday that Microsoft has until September 15 to reach a deal.

Ticker	Security	Last	Change	Change %
F	FORD MOTOR COMPANY	6.76	+0.07	+1.12%
MSFT	MICROSOFT CORP.	211.82	-4.72	-2.18%
BP	BP PLC	23.57	+1.48	+6.68%

On the earnings front, BP booked a $10.9 billion writedown on its way to a quarterly pre-tax loss of $16.8 billion. The London-based oil giant cut its 10.5-cent-per-share dividend in half and said it would aim to reduce net carbon emissions from oil and gas by as much as 40 percent over the next decade.

Apparel maker Ralph Lauren said same-store sales in the three months through June plunged 57 percent from a year ago as COVID-19 shuttered shops around the world.

FORD CEO JIM HACKETT TO STEP DOWN

Take-Two Interactive reported a 54 percent jump in quarterly revenue and raised its earnings forecast after the video-game maker saw surging demand amid the coronavirus pandemic.

Ticker	Security	Last	Change	Change %
RL	RALPH LAUREN CORP	65.18	-4.54	-6.51%
TTWO	TAKE TWO	176.58	+8.89	+5.30%
AAPL	APPLE INC.	440.06	+4.30	+0.99%

Meanwhile, Apple continues its quest to become the first company to reach the vaunted $2 trillion market value. The tech giant, which finished the prior session with a market cap of $1.86 trillion, needs shares to close at or above $467.77 to reach the mark.

Looking at commodities, West Texas Intermediate crude oil was up 63 cents at $41.64 per barrel while gold was up $26.30 at $2,012.60 an ounce.

RISK OF DELAYED, DISPUTED ELECTION RESULTS LOOMS OVER MARKET RALLY

U.S. Treasurys gained, pushing the yield on the 10-year note down by 2.5 basis points to 0.538 percent.

In Europe, Germany's DAX was down 0.46 percent while Britain’s FTSE slipped 0.08 percent. France's CAC 40 rose 0.26 percent.

Markets rallied across Asia, with Hong Kong’s Hang Seng climbing 2 percent, Japan’s Nikkei adding 1.7 percent and China’s Shanghai Composite edging up 0.11 percent.

Source: Fox Business

Stocks tread water as earnings season gathers pace

By Caitlin OstroffThe Wall Street Journal

Futures indicate the S&P 500 could come under pressure after the New York opening bell

U.S. stock futures wavered Tuesday as a slew of major companies reported earnings, some of them beating already low expectations from coronavirus economic troubles.

Futures tied to the S&P 500 declined 0.3%, indicating that the benchmark index could come under pressure after the New York opening bell. The pan-continental Stoxx Europe 600 fell 0.2%.

In Europe, shares in BP climbed 6.4% after the British oil-and-gas producer slashed its quarterly dividend for the first time in a decade and launched a new strategy to pivot away from oil and gas. Discount airline easyJet rose 8% on a better-than-expected outlook.

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Private-equity firm KKR & Co. and energy company Exelon are among those reporting quarterly profits before the opening bell. More than three-quarters of S&P 500 companies have reported earnings, with the majority beating analyst expectations, according to UBS. This has led estimates for the third quarter to rise by 2.5% since the end of June.

Robust earnings from tech companies have lifted U.S. stock markets higher in recent weeks, with the Nasdaq Composite climbing to a fresh record Monday.

MICROSOFT, APPLE LIFT NASDAQ TO 29TH RECORD CLOSE OF YEAR

Investors, who worried that an uptick of coronavirus infections last month would slow economic recovery, have been closely watching a recent decline in new cases.

“One day’s data doesn’t mean anything, but I’m looking at whether that’s the beginning of a trend,” said Fahad Kamal, chief market strategist at Société Générale’s private banking and wealth management division Kleinwort Hambros.

Bond markets have remained cautious though, with bond yields ticking lower even as stocks have climbed, Mr. Kamal said. The yield on the 10-year Treasury declined to 0.548% from 0.562% Monday.

RISK OF DELAYED, DISPUTED ELECTION RESULTS LOOMS OVER MARKET RALLY

“There’s more truth in the bond market, and if you look at the yields they’re still at record lows. There’s still a very palpable sense of fear among investors that there could be tail risks that materialize,” he said.

Markets are monitoring negotiations among Democratic leaders and White House officials on a new coronavirus aid package. The two sides remain at odds over whether to cut a $600-a-week federal jobless supplement or provide aid to financially strapped states and localities.

“The market’s assumption is that the U.S. economy is not yet ready to stand on its own two feet. It appears that there is agreement that more needs to be done, it’s just about the shape of that package,” said Hugh Gimber, strategist at J.P. Morgan Asset Management.

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Shares in spirits maker Diageo, which owns Johnnie Walker whiskey and Smirnoff vodka among other brands, fell 6.5% after it reported that operating profit fell as the coronavirus pandemic drove down sales in the second half of the year. North American sales were strong as consumers shifted alcohol buying from bars to grocery stores, but the growth didn’t make up for shortfalls in other markets.

Shares in Bayer fell 3.4% after the chemicals and pharmaceuticals company said it swung to a net loss of €9.55 billion ($11.23 billion) in the second quarter. Bayer set aside provisions for its multibillion-dollar settlement with plaintiffs alleging the company’s Roundup herbicides cause cancer.

In the Asia-Pacific region, Hong Kong’s Hang Seng climbed 2%, leading gains in the region. Japan’s Nikkei 225 gained 1.7% and Australia’s benchmark S&P/ASX 200 rose 1.9%.

Walt Disney will report earnings after trading ends.

Source: Fox Business

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

US growth report to show a record-breaking economic plunge

By Ken MartinFOXBusiness

The drop in GDP is expected to be the biggest drop ever recorded

The Commerce Department will issue the latest report on the economy on Thursday and its expected to be a pretty ugly picture.

The first reading on second-quarter gross domestic product is estimated to show a plunge at an annual rate of 34.1 percent. That would be the largest drop ever recorded. The first quarter showed a 5 percent decline.

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The U.S. economy faces a dim outlook as a resurgent coronavirus intensifies doubts about any sustained recovery the rest of the year.

A huge plunge in consumer spending as people stayed home and avoided shopping, traveling or gathering in crowds as the virus raged is expected to show a plunging April-June quarter.

Depressed activity in such areas as business investment, home construction and government spending also likely contributed to the worst quarterly contraction dating to 1947.

Most analysts expect the economy to manage a sharp bounce-back in the current July-September quarter, perhaps of as much as 17 percent or higher on an annual basis.

FED UNDERSCORES SUPPORT FOR ECONOMIC RECOVERY THREATENED BY CORONAVIRUS RESURGENCE

With the rate of confirmed coronavirus cases now rising in a majority of states, more businesses being forced to pull back on re-openings and the Republican Senate proposing to scale back the government's aid to the unemployed, the economy could worsen in the months ahead.

Analysts warn that the outlook could darken still further if Congress fails to enact enough financial aid to replace the expiring $600-a-week federal boost in unemployment benefits or provide sufficient help for businesses and state and local governments.

Senate Republicans released a $1 trillion proposal on Monday that falls far short of a $3 trillion measure the House has passed, leaving an enormous gap for Democrats and Republicans to bridge as some elements of Congress' earlier emergency relief programs run out.

On the topic of unemployment, the Labor Department is expected to say the number of claims for unemployment benefits rose for the second week in a row to 1.45 million, up from 1.416 million the prior week. Since the coronavirus lockdowns began in mid-March some 52.69 million people have filed for jobless claims. An additional 1.45 million would lift that total to 54.14 million, or 33.8 percent of the U.S. workforce.

FED OUTLOOK TURNS GLOOMIER AS CORONAVIRUS SPREADS

Recent reports sketch a cautionary picture of the economy, with weekly applications for unemployment benefits still topping 1 million and consumer confidence falling sharply, with big declines in Michigan, Florida, Texas and California, all of which suffered a resurgence in confirmed virus cases.

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Economists regard increased government aid as essentially a stop-gap action to keep the recession from deepening further. The most critical need, they agree, is to control the virus, most likely through a vaccine that most likely won't be widely available until next year.

Source: Fox Business

The Associated Press contributed to this article.

Kodak stock up 2,189% after Trump backs pivot into drug industry

By Jonathan GarberFOXBusiness

Eastman Kodak Co. shares surged for a second day Wednesday following the company’s shift into the pharmaceutical industry after securing a $765 million government loan to produce generic drugs.

Shares of the Rochester, New York-based company known for making chemicals used in film have gained as much as 2,189 percent since the announcement on Tuesday morning, reaching a high of $59.98. They settled at $2.62 apiece at the close of trading on Monday.

Ticker	Security	Last	Change	Change %
KODK	EASTMAN KODAK CO.	33.20	+25.26	+318.14%

Eastman Kodak will supply about 25 percent of small-molecule key starter materials and active pharmaceutical ingredients for the U.S. supply chain, CEO Jim Continenza told FOX Business’ Stuart Varney on Wednesday.

For Kodak, which started producing hand sanitizer, face shields and circuit boards for ventilators during the COVID-19 pandemic, a shift into the drug industry shouldn’t be much different from some of the processes for its film business.

The company previously developed nonprescription drugs before selling its Sterling Winthrop business unit to British drugmaker SmithKline Beechman for $2.93 billion in 1994.

Kodak has been making unregulated key starter materials “for a couple of years” and will now expand production to a “large scale,” according to Continenza.

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Its entry into the pharmaceuticals is part of President Trump’s plan to use the Defense Production Act to bring the manufacturing of critical pharmaceutical ingredients back to the U.S. after the pandemic underscored the nation’s reliance on China.

The change in direction comes at an opportune time for Kodak, which had seen its market capitalization shrink to $114.58 million since emerging from its Chapter 11 bankruptcy filing in September 2013.

Kodak’s market capitalization, which was near $1.4 billion on Wednesday, reached a post-bankruptcy peak of $1.46 billion in October 2013, according to Dow Jones Market Data. Its all-time high was $31.4 billion in February 1997.

Source: Fox Business

Tech leads stocks higher as CEOs testify and Fed keeps rates near zero

By Jonathan GarberFOXBusiness

The Fed won't waiver in its support of the US economy

Stocks rallied after the Federal Reserve confirmed it will continue to support the U.S. economy in its recovery from the coronavirus.

The Dow Jones Industrial Average gained 162 points, or 0.62 percent, while the S&P 500 and the Nasdaq Composite rose 1.25 percent and 1.35 percent, respectively.

FED UNDERSCORES SUPPORT FOR ECONOMIC RECOVERY THREATENED BY CORONAVIRUS RESURGENCE

Ticker	Security	Last	Change	Change %
I:DJI	DOW JONES AVERAGES	26539.57	+160.29	+0.61%
SP500	S&P 500	3258.44	+40.00	+1.24%
I:COMP	NASDAQ COMPOSITE INDEX	10542.943112	+140.85	+1.35%

The Fed kept interest rates near zero, as expected, and said it is "committed to using its full range of tools to support the U.S. economy" while also noting the pandemic has caused "tremendous human and economic hardship across the United States and around the world."

Video

Large-cap tech stocks rose as Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Facebook CEO Mark Zuckerberg and Google CEO Sundar Pichai testified at an antitrust hearing in defense of their business practices.

Ticker	Security	Last	Change	Change %
AMZN	AMAZON.COM INC.	3,033.53	+33.20	+1.11%
AAPL	APPLE INC.	380.16	+7.15	+1.92%
FB	FACEBOOK INC.	233.29	+3.17	+1.38%
GOOG	ALPHABET INC.	1,522.02	+21.68	+1.45%

Elsewhere on the earnings front, General Motors Co. steered to a loss as dealers and factories were forced to temporarily close their doors amid the COVID-19 pandemic.

Starbucks Corp. global same-store sales tumbled 40 percent from a year ago, resulting in a $678.4 million quarterly loss. The company said 99 percent of locations in China and 96 percent of U.S. stores have reopened for business.

Ticker	Security	Last	Change	Change %
BA	BOEING COMPANY	166.01	-4.83	-2.83%
GM	GENERAL MOTORS COMPANY	25.89	-0.44	-1.67%
SBUX	STARBUCKS CORPORATION	77.42	+2.78	+3.72%

Meanwhile, computer chipmaker Advanced Micro Devices Inc. reported mixed top- and bottom-line results, and raised its revenue guidance for the remainder of the year.

General Electric Co. revenue edged out expectations, but earnings fell short. While the company spent $2.1 billion more on industrial operating expenses than it brought in, the deficit was smaller than expected.

Ticker	Security	Last	Change	Change %
AMD	ADVANCED MICRO DEVICES INC.	76.09	+8.48	+12.54%
GE	GENERAL ELECTRIC COMPANY	6.59	-0.30	-4.35%
APRN	BLUE APRON HOLDINGS	12.24	-1.84	-13.07%

Blue Apron Holdings, Inc. achieved a $1.1 million profit as more Americans cooked at home during the pandemic. The meal-kit maker forecast net sales growth for the rest of 2020.

Outside of earnings news, Spirit Airlines Inc. is preparing to tell unions on Friday that 20 percent to 30 percent of workers could be furloughed in October once the government stimulus package expires, according to an internal memo seen by Reuters.

Victoria’s Secret owner L Brands Inc. plans to cut 850 jobs, or 15 percent of its corporate workforce, in an effort to reduce annualized costs by $400 million.

Ticker	Security	Last	Change	Change %
SAVE	SPIRIT AIRLINES INC.	16.45	-0.09	-0.54%
LB	L BRANDS INC.	25.88	+6.76	+35.36%
KODK	EASTMAN KODAK CO.	33.20	+25.26	+318.14%

Eastman Kodak Co. continued to surge after gaining 203 percent on Tuesday when it announced a pivot into the pharmaceutical business after receiving a $765 million government loan to produce generic drugs.

Looking at commodities, gold climbed $8.80 to a record-high $1,953.50 an ounce, the ninth straight session of gains while West Texas Intermediate crude oil gained 0.56 percent to $41.27 a barrel.

U.S. Treasurys were little changed with the yield on the 10-year note near 0.578 percent.

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In Europe, France’s CAC traded up 0.6 percent and Britain’s FTSE edged up 0.04 percent while Germany’s DAX slipped 0.1 percent.

Asian markets finished mixed, with China’s Shanghai Composite surging 2.06 percent and Hong Kong’s Hang Seng adding 0.45 percent after second-quarter GDP contracted by 9 percent, worse than the 8.3 percent drop that was expected. Japan’s Nikkei fell 1.15 percent.

Source: Fox Business