Dow, S&P jump as states begin coronavirus reboot

By Jonathan Garber FOXBusiness

Investors usher in the week on an optimistic note

U.S. equity markets rallied Monday as a handful of states took steps to reopen their economies from shutdowns caused by COVID-19 and as lenders resumed doling out cash to small businesses.

The Dow Jones Industrial Average gained over 353 points, or 1.49 percent, while the S&P 500 and Nasdaq Composite were higher by 1.45 percent and 1.1 percent, respectively.

Ticker	Security	Last	Change	Change %
I:DJI	DOW JONES AVERAGES	24133.78	+358.51	+1.51%
SP500	S&P 500	2878.48	+41.74	+1.47%
I:COMP	NASDAQ COMPOSITE INDEX	8730.164292	+95.64	+1.11%

U.S. banks resumed processing applications for the Paycheck Protection Program, which received a $310 billion injection after President Trump signed the relief package passed by Congress last week. While some of the community banks reported technical glitches with the portal those were being addressed in the afternoon, according to reports.

Small business lending 2.0 comes as Georgia, Oklahoma and South Carolina took steps over the weekend to reopen, allowing beaches, retail stores, barbershops and salons to unlock their doors. Others are expected to follow in the days ahead.

GOLDMAN SACHS HAS SIMPLE 3-PART CORONAVIRUS PLAN TO CAPITALIZE ON REOPENING OF US ECONOMY

Looking at stocks, General Motors suspended its quarterly dividend and share repurchases in an effort to preserve cash. The automaker also extended its $3.6 billion revolving credit agreement until April 2022.

Boeing scrapped a $4.2 billion joint venture with Brazilian planemaker Embraer which aimed to target new markets for the latter’s C-390 Millennium aircraft.

Ticker	Security	Last	Change	Change %
GM	GENERAL MOTORS COMPANY	22.45	+0.50	+2.28%
BA	BOEING COMPANY	128.68	-0.30	-0.23%

Deepwater oil driller Diamond Offshore filed for Chapter 11 bankruptcy as the recent crash in crude oil prices has made its business unsustainable.

AutoNation returned the $77 million it received through the Payroll Protection Program, following in the footsteps of other publicly traded companies including Ruth’s Chris Steak House parent Ruth’s Hospitality Group and Shake Shack.

German lender Deutsche Bank reported a surprise preliminary first-quarter profit and set aside about 500 million euros ($542 million) for loan losses due to the COVID-19 pandemic.

Ticker	Security	Last	Change	Change %
DO	DIAMOND OFFSHORE	0.94	+0.11	+13.06%
AN	AUTONATION	35.79	+2.16	+6.42%
DB	DEUTSCHE BANK AG	6.69	+0.74	+12.44%

A number of high-profile companies including 3M, Amazon, Apple, Caterpillar and Tesla are set to report their quarterly results later this week.

Commodities were weaker, with West Texas Intermediate crude oil down 25 percent at $12.78 a barrel and gold off 0.67 percent to $1,712 an ounce.

U.S. Treasurys fell, running the yield on the 10-year note up to 0.655 percent.

In Europe, Germany’s DAX led the advance, up 3.13 percent, while Britain’s FTSE and France’s CAC were higher by 1.64 percent and 2.55 percent, respectively.

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Markets rallied across Asia with Japan’s Nikkei climbing 2.71 percent, Hong Kong’s Hang Seng adding 1.88 percent and China’s Shanghai Composite gaining 0.25 percent.

Source: FoxBusiness

Deutsche Bank hints at loan defaults among customers as profit falls from last year

By Megan Henney FOXBusiness

Deutsche Bank said Sunday it expects to report a significant drop in net income during the first quarter compared to last year and will set aside 500 million euros ($543 million) for potential loan losses as it braces for the financial impact of the coronavirus pandemic.

In a pre-release Sunday, the German-based bank said it expects net profit for the first quarter to be 66 million euros ($71.5 million), compared with 201 million euros in the same period last year.

WILL CORONAVIRUS CRISIS SPARK FRESH EXODUS FROM HIGH-TAX STATES? 

The bank will release full details of its earnings results on Wednesday as scheduled. Revenues are expected to be 6.4 billion euros.

Deutsche Bank also set aside 500 million euros for credit losses as widespread lockdowns and disruptions of supply chains throughout the world hammer the global economy.

“This extraordinary economic environment suggests that we will see a higher level of credit defaults,” Deutsche Bank said.

CORONAVIRUS HIT HIGH-TAX STATES RENEW SALT CAP REPEAL EFFORTS

The embattled lender also said that its common equity tier 1 ratio (CET1), a measure of a bank’s financial strength, dropped to 12.8 percent at the end of the first quarter, down from 13.6 percent in the year-ago period.

"The decline in the CET1 ratio in the quarter included approximately a 30 basis points negative impact from the revised securitization framework as expected, and approximately 40 basis points of items precipitated by the COVID-19 pandemic," the bank said. It continued: “It is possible that the bank will fall modestly and temporarily below its previous CET1 target of at least 12.5% and the fully-loaded leverage ratio target of 4.5 percent by the end of 2020."

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Source: FoxBusiness

Possible Gilead coronavirus treatment remdesivir fails in China trial: report

By Audrey ConklinFOXBusiness

Summary of the study was posted to the World Health Organization website before being taken down

A coronavirus test by biopharmaceutical company Gilead failed a clinical trial in China, the Financial Times reported.

Gilead shares dropped on the news.

Ticker	Security	Last	Change	Change %
GILD	GILEAD SCIENCES INC.	77.78	-3.53	-4.34%

The antiviral drug remdesivir, used to treat malaria, did not help speed the recovery of COVID-19 patients, according to FT and Stat News. Both outlets cite a summary of the report that was initially shared by the World Health Organization before it was taken down.

A WHO spokesperson confirmed to FOX Business that the report was shared early and taken down.

In this March 2020 photo provided by Gilead Sciences, a vial of the investigational drug remdesivir is visually inspected at a Gilead manufacturing site in the United States. (Gilead Sciences via AP)

"A draft document was provided by the authors to WHO and inadvertently posted on the website and taken down as soon as the mistake was noticed. The manuscript is undergoing peer review ,and we are waiting for a final version before WHO comments," the spokesperson said.

A Gilead spokesperson told Stat that the "the post included inappropriate characterization of the study."

CORONAVIRUS PATIENTS RESPONDING TO GILEAD DRUG REMDESIVIR

The summary came from one of two Chinese remdesivir trials that were suspended early because there were not enough patients available.

Last week, Stat reported results from another clinical remdesivir trial conducted by the University of Chicago Medicine, which found nearly all patients who were given daily infusions of Remdesivir were discharged from the hospital in less than a week.

In this March 2020 photo provided by Gilead Sciences, rubber stoppers are placed onto filled vials of the investigational drug remdesivir at a Gilead manufacturing site in the United States. (Gilead Sciences via AP)

The university recruited 125 coronavirus patients, 113 of which had "severe disease" into two clinical trials to assess five and 10-day treatment courses of the drug.

Kathleen Mullane, the infectious disease specialist overseeing the University of Chicago's Remdesivir studies, told STAT that the results have been promising so far.

"Most of our patients are severe and most of them are leaving at six days, so that tells us the duration of therapy doesn't have to be 10 days," Mullane said. "We have very few that went out to 10 days, maybe three."

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Last month, President Trump touted the drug's potential, saying it "seems to have a very good result."

Remedsivir was one of the first medicines identified as having the potential to treat coronavirus in lab tests. If deemed safe and effective in clinical trials, it could lead to fast approval from the Food and Drug Administration and become the first approved treatment against the disease.

Source: FOX Business' Lucas Manfredi contributed to this report.

U.S. business activity hits fresh record lows amid coronavirus lockdowns

WASHINGTON -- U.S. business activity plumbed new record lows in April as the novel coronavirus severely disrupted manufacturing and services industry production, pushing the economy into uncharted waters.

Data firm IHS Markit said on Thursday its flash U.S. Composite Output Index, which tracks the manufacturing and services sectors, plunged to a reading of 27.4 this month. That was lowest since the series began in late-2009 and followed a final reading of 40.9 in March. A reading below 50 indicates a contraction in private sector output.

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States and local governments have issued “stay-at-home” or “shelter-in-place” orders affecting more than 90% of Americans to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus, and abruptly halting economic activity. Since March 21, more than 22 million people have filed for unemployment benefits.

“The COVID-19 outbreak dealt a blow to the U.S. economy of a ferocity not previously seen in recent history during April,” Chris Williamson, chief business economist at IHS Markit, said in a statement. “The deterioration in the flash PMI numbers indicates a rate of contraction exceeding that seen even at the height of the global financial crisis.”

Economists say the economy slipped into recession in March.

The National Bureau of Economic Research, the private research institute regarded as the arbiter of U.S. recessions, does not define a recession as two consecutive quarters of decline in real GDP, as is the rule of thumb in many countries. Instead, it looks for a drop in activity, spread across the economy and lasting more than a few months.

The IHS Markit survey’s services sector flash Purchasing Managers Index dropped to an all-time low reading of 27.0 this month from 39.8 in March. Economists polled by Reuters had forecast a reading of 31.5 in April for the services sector, which accounts for roughly two-thirds of the U.S. economy.

Factory activity contracted further this month, with the flash manufacturing PMI sinking to 36.9. That was the lowest since March 2009 and following a final reading of 48.5 in March. Economists had forecast the index for the sector, which accounts for 11% of the economy, falling to 38.0 in April.

A measure of new orders received by factories dropped at its steepest pace since early 2009, suggesting manufacturing production could continue to decline through the second quarter. The Federal Reserve reported last week that manufacturing output dropped at its sharpest pace in 11 years in the first quarter.

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Manufacturing was already struggling from the fallout of the Trump administration’s trade war with China well before the before the coronavirus hit U.S. shores.

In addition to COVID-19 fracturing global supply chains, a spectacular collapse in U.S. oil prices this week is seen undercutting demand for oil drilling and shaft exploration equipment, pressuring domestic manufacturers.

According to IHS Markit, “many firms highlighted the cancellation or postponement of both domestic and foreign orders following the pandemic escalation,” noting that manufacturers were pessimistic about outlook for output over the coming year.

It said though some manufacturers “expressed hopes of a turnaround in the third quarter, many firms were concerned about the timespan of any recovery and the longevity of current emergency public health measures.”

Source: FoxBusiness/Reuters

World Bank president says world in ‘deep’ coronavirus recession that will hurt poorest countries the most

By Megan Henney 
FOXBusiness

Malpass said the coronavirus has triggered a 'deep' recession

The coronavirus pandemic has pushed the world into a “deep” economic recession that will disproportionately hurt poorer countries, according to the head of the World Bank.

“I’m afraid there’s a deep recession,” David Malpass told FOX Business’ Maria Bartiromo during an interview on Monday. “That’s pretty clear. It’s the poorest countries [that are hurt] the most.”

In early April, the World Bank approved a $1.9 billion funding program to help about 25 of the world’s poorer countries combat the virus. The largest amount of aid went toward India ($1 billion), followed by Pakistan ($200 million), Sri Lanka ($129 million), Afghanistan ($100 million) and Ethiopia ($83 million).

CORONAVIRUS UNEMPLOYMENT COULD HIT POST-DEPRESSION HIGH, EXPERTS SAY

Malpass predicted at the time that the World Bank could ultimately deploy up to $160 billion over the next 15 months for virus relief efforts.

And last week, the Washington-based organization said its “pandemic bonds” would pay out close to $133 million to some of the poorest nations impacted by the virus, though critics have questioned whether the aid is arriving too late.

The virus has forced economies throughout the world to come to a near standstill, bringing to a screeching halt global supply chains and caused tens of millions of workers to lose their jobs as governments imposed strict stay-at-home mandates to minimize the spread.

Malpass estimated that at least 50 million people will fall into “extreme poverty” as a result of the outbreak, leading to higher infant mortality rates and stunted growth rates for children. The length of economic recovery in the world’s poorer nations hinges on advanced economies, he said.

CORONAVIRUS COULD PUSH US INTO WORST RECESSION SINCE GREAT DEPRESSION, IMF SAYS

“I think it’s urgent that we find a way to shorten the time to get going,” he said.

The U.S. has the highest number of COVID-19 cases, with nearly 760,000 reported, accounting for roughly one-third of the global outbreak, according to data provided by Johns Hopkins University. More than 40,600 people have died in the U.S. as a result of the virus.

Source: Fox Business

Stock futures fall as oil plunges on demand drop

By Suzanne O'Halloran
FOXBusiness

U.S. stock futures are trading lower as oil falls to 1999 levels.

Investors also await additional coronavirus updates as more cities consider opening businesses in various phases as part of a broader plan to begin rebooting the U.S. economy.

The Dow Jones Industrial Average traded down nearly 400 points, while the S&P 500 was off 1.5 percent and the Nasdaq Composite was down 1 percent.

Oil remained under pressure, falling Monday over 27 percent to $13.16, after dropping 19.7 percent for the week. WTI touched an 18-year low of $17.31 on Friday before rallying into the close. Meanwhile gold fell 2.7 percent for the week to $1,689 per ounce.

Additionally, investors and small business owners are watching whether the government's Paycheck Protection Program, which ran out of funds last week, will be replenished.

President Trump, during his coronavirus task force update on Sunday evening, said negotiations were ongoing with the Democrats after additional funding after failed to come together late last week.

House Speaker Nancy Pelosi indicated the same during an interview on "Fox News Sunday."

"They will have more money as soon as we come to agreement, which will be soon," said Pelosi adding, "And I think people will be very pleased, because these small businesses must thrive in a community where their health is essential to them opening up, and they have to open up in order to thrive."

CHASE LEADS CORONAVIRUS LOANS

The White House is confident a deal will be reached, an administration source told Fox News on Friday. That package would include another $250 billion for paycheck program loans, an unknown amount for the SBA’s economic-injury disaster loan program and $75 billion for hospitals, the source said.

In Asian markets on Monday, Japan's Nikkei fell 1.2 percent, Hong Kong's Hang Seng slipped 0.2 percent and China's Shanghai Composite gained 0.5 percent.

In Europe, London's FTSE slipped 0.7 percent, Germany's DAX declined 0.5 percent and France's CAC fell 0.8 percent.

JC PENNEY TO MISS $12M LOAN PAYMENT AS RETAILER MULLS BANKRUPTCY

In retail news, Neiman Marcus may file for bankruptcy as soon as this coming week, Reuters reported, noting it would be the first retailer to fall since the coronavirus pandemic hit. JC Penney is another retailer that has discussed exploring options as store closures throughout the country take their toll on the bottom line.

THE SMALL BIZ LENDING PROGRAM RUNS DRY

Despite the ongoing uncertainty in the U.S. economy stocks capped off a strong Friday and notched their second straight week of gains. For the Dow the two-week percentage gain of 15 percent is the best since 1938 while the S&P's 15.5 percent jump is the best since 1974 and the Nasdaq's 17 percent jump is the strongest since 2001, as compiled by the Dow Jones Market Data Group.

Earnings will be in focus this week with companies including IBM, Netflix, Halliburton and Coca-Cola to name a few, all reporting results.

Source: Fox Business

Trump vs. governors: Who decides when US economy reopens after coronavirus?

By Megan Henney FOXBusiness

President Trump declared on Monday that he has the power to “open up” states following strict stay-at-home measures adopted to curb the spread of the novel coronavirus — not governors.

“It is the decision of the President, and for many good reasons,” Trump wrote in a tweet. “With that being said, the Administration and I are working closely with the Governors, and this will continue. A decision by me, in conjunction with the Governors and input from others, will be made shortly!”

The tweet sets up a potential showdown between Trump and state governors as some White House officials eye May 1 as a possible date to begin easing social distancing guidelines and restart parts of the country to blunt the economic damage from the pandemic.

FAUCI: 'ROLLING REENTRY' OF US ECONOMY POSSIBLE IN MAY

With the economy all but paralyzed, unemployment has surged to more than 16 million in the past three weeks alone, a stunning sign of the depth of the pain inflicted by the shutdown, and economists are increasingly warning of a severe contraction in the second quarter, with some estimates ranging as high as 38 percent.

With some signs the virus has started to plateau in New York, the American epicenter, and a lower-than-projected death toll, Trump has indicated a desire to roll back some of the mitigation measures.

"I'm going to have to make a decision, and I only hope to God that it's the right decision," Trump said Friday at the White House. "It's the biggest decision I've ever had to make."

The federal social distancing guidelines unveiled by the Trump administration in mid-March are not mandatory, although states are encouraged to adhere to the recommendations.

More than 40 states have issued stay-at-home orders, according to the National Governors Association, meaning the decision of whether to lift those mandates or not would belong to those governors — not the White House.

EVERYTHING YOU NEED TO KNOW ABOUT WHO GETS A CORONAVIRUS RELIEF CHECK

Although Trump could likely use the vast power of his bully pulpit to influence states, particularly those with Republican governors, to adhere to federal measures, “the president cannot simply order state and local officials to change their policies,” Bobby Chesney, a University of Texas School of Law professor, wrote in a recent analysis.

Under the 10th Amendment, “the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

Although federal law is supreme over state law in the country, Chesney noted there’s no existing federal statute that runs contrary to the stay-at-home edicts and said there’s little chance that Congress passes a law that even appears to grant Trump authority to override state and local laws.

"No federal statute gives the president the authority to override state decisions. Nor does he possess this inherent authority under Article II of the Constitution. Nor do any other provisions of the Constitution (such as the interstate commerce clause) confer this power on him,” William Galston, a senior fellow at the Brookings Institute wrote in a recent blog. “IIf governors choose to disregard his call to reopen their states, their decisions will be final, and the president will have to live with them.”

Source: FoxBusiness

Stock futures rise ahead of bank earnings

JPMorgan Chase and Wells Fargo will report quarterly earnings on Monday.

U.S. equity futures are pointing to a higher open as the nation's biggest banks kickoff earnings season.

The major futures indexes are indicating a rise of 1.3 percent or about 300 Dow points when trading begins on Tuesday.

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Wall Street began the week with the S&P 500 losing 1 percent after cutting early losses by more than half toward the end of the day. The benchmark index surged 12 percent last week, its best gain since 1974.

Ticker	Security	Last	Change	Change %
I:DJI	DOW JONES AVERAGES	23390.77	-328.60	-1.39%
SP500	S&P 500	2761.63	-28.19	-1.01%
I:COMP	NASDAQ COMPOSITE INDEX	8192.42471	+38.85	+0.48%

The S&P lost 28.19 points to 2,761.63. The Dow Jones Industrial Average fell 1.4 percent. The Nasdaq rose 0.5 percent.

China's exports fell 6.6 percent in March from a year earlier, while imports shrank 0.9 percent, a better than expected outcome as factories restarted production, though the global coronavirus health crisis looks set to keep trade under pressure over coming months.

Japan's benchmark Nikkei 225 added 3.1 percent, Hong Kong's Hang Seng rose 0.6 percent and China's Shanghai Composite added 1.6 percent.

In Europe, London's FTSE slipped 0.5 percent, Germany's DAX gained 1 percent and France's CAC added 0.1 percent.

This week, stocks could be in for more volatility as companies report results for the first quarter, though analysts will be focused primarily on what management teams have to say about what the rest of the year looks like.

CORONAVIRUS CHECK COMING IN THE MAIL? IRS PREPARES TO LAUNCH RESOURCE TO SPEED UP PROCESS

JPMorgan Chase and Wells Fargo will report quarterly earnings on Monday.

Analysts predict that earnings for all the companies in the S&P 500 will be down 9 percent in the first quarter from a year earlier, according to FactSet. That would be the biggest annual decline in earnings for the index since the third quarter of 2009 when earnings slumped nearly 16 percent.

The closure of businesses and mandates for people to stay home to combat the coronavirus pandemic have forced a record number of Americans out of work and raised the possibility that many businesses could end up bankrupt. That has many investors anticipating what may be the worst recession since the Great Depression.

There are more than 1.86 million confirmed cases worldwide, led by the United States with more than 557,000, according to a tally by Johns Hopkins University.

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U.S. benchmark crude slipped 35 cents to $22.07 a barrel in electronic trading on the New York Mercantile Exchange.

Brent, the international standard, fell 3 cents to $31.70 a barrel.

Source: By Ken Martin FOXBusiness

The Associated Press contributed to this article.