Stocks sink before House weighs $2T coronavirus aid package
U.S. equity markets stumbled Friday morning as investors awaited a House vote on the bill that would extend $2 trillion worth of aid to individuals, small businesses and corporations hit hardest by the COVID-19 pandemic.
Concerns emerged Thursday evening that Rep. Thomas Massie, R-Ky., could try to prevent a so-called voice vote on the House floor that would fast-track the process. A voice vote would allow those present to yell “yea” or “nay” to express their support or dissent with the loudest side prevailing.
The Dow Jones Industrial Average tumbled 792 points, or 3.52 percent, in the opening minutes of trading, while the S&P 500 and Nasdaq Composite dropped 3.1 percent and 2.8 percent respectively.
On Thursday, the Dow emerged from its bear market, capping off a 3-day advance of 3,960.24 points, or 21.30%. It was the biggest 3-day percentage gain since 1931.
|I:DJI||DOW JONES AVERAGES||21853||-699.17||-3.10%|
|I:COMP||NASDAQ COMPOSITE INDEX||7573.64297||-223.89||-2.87%|
Looking at stocks, airlines were in focus after Treasury Secretary Steven Mnuchin said the government would take stakes in the companies in exchange for billions of dollars of aid extended through grants.
|UAL||UNITED AIRLINES HLDG.||32.85||-2.70||-7.61%|
|AAL||AMERICAN AIRLINES GROUP INC.||14.62||-1.04||-6.64%|
|DAL||DELTA AIR LINES INC.||30.04||-1.67||-5.25%|
|LUV||SOUTHWEST AIRLINES CO.||38.35||-2.88||-6.99%|
Meanwhile, cruise operators, which are not domiciled in the U.S. and won’t be receiving government assistance, were under significant pressure.
|RCL||ROYAL CARIBBEAN CRUISES||33.71||-6.90||-16.98%|
Electric-vehicle maker Tesla will be slashing about 75 percent of the workforce at its Nevada battery plant, according to a website posting by Storey County manager Austin Osborne.
On the earnings front, video-game retailer GameStop reported mixed fourth-quarter results and CEO George Sherman said the company was seeing “increased demand” for its products in the wake of COVID-19.
Apparel chain Lululemon reported better-than-expected quarterly results and a 20 percent surge in same-store sales. Lulu declined to give an outlook for fiscal year 2020 due to uncertainty caused by COVID-19.
|LULU||LULULEMON ATHLETICA INC.||191.99||-8.81||-4.39%|
Looking at commodities, gold fell 1.1 percent to $1,642 an ounce and West Texas Intermediate crude oil was down 4.8 percent at $21.51 a barrel.
U.S. Treasurys gained, dropping the yield on the 10-year note by 4.7 basis points to 0.761 percent.
In Europe, Britain’s FTSE, down 5.8 percent, paced the decline after U.K. Prime Minister Boris Johnson tested positive for coronavirus and said he was experiencing mild symptoms. Elsewhere, France’s CAC and Germany’s DAX were lower by 4.8 percent and 3.7 percent, respectively.
Asian markets clawed their way higher, with Japan’s Nikkei gaining 3.88 percent, Hong Kong’s Hang Seng advancing 0.56 percent and China’s Shanghai Composite adding 0.26 percent. The gains came despite a historic drop in China’s industrial profits.