Stocks are starting off April and the second quarter with steep losses, picking up where they left off after a dismal first quarter. The coronavirus announcements in the last 18 hours have been generally downbeat, with President Trump warning last night that 100,000 to nearly 250,000 fatalities may be possible even after the aggressive steps that are being taken.
ECONOMIC EVENTS: In U.S. data, ADP reported private payrolls fell "only" 27,000 in March, which was not as bad as many had forecast. However, ADP acknowledged the data don't really reflect the realities on the ground as a lot of the firings have taken place after the week that ended its survey. The ISM manufacturing index dropped 1.0 point to 49.1 in March, which was also not as bad as feared. Markit's manufacturing PMI was revised down to 48.5 in the final print for March. That was a little lower than the 49.2 flash reading for the month and down 2.2 points from February's 50.7 reading. Construction spending dropped 1.3% in February.
Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now 887,067 confirmed cases of COVID-19 and 44,264 deaths due to the disease.
In China, the Caixin manufacturing PMI climbed 9.8 points to 50.1 in March, almost fully recovering from the 10.8 point drop to the record low of 40.3 in February. The better than expected bounce is in line with the surprising 16.3 point jump in the official index to 52.0.
TOP NEWS: Shares of General Motors (GM) are down 8.5% after the automaker announced that it delivered 618,335 vehicles in the U.S. in the first quarter of 2020, a decrease of about 7% compared to a year ago. "The industry experienced significant declines in March due to the outbreak of COVID-19," noted GM in its sales announcement. Meanwhile, FCA US reported a 10% decline in its first quarter sales to 446,768 vehicles, also noting that "the strong momentum in January and February was more than offset by the negative economic impact of the coronavirus in March."
In M&A news, T-Mobile (TMUS) announced that it has officially completed its merger with Sprint (S) to create the new T-Mobile. The company also announced that with close of the merger, it has successfully completed its long-planned CEO transition from John Legere to Mike Sievert ahead of schedule.
Last night, Xerox (XRX) announced that "the current global health crisis and resulting macroeconomic and market turmoil caused by COVID-19 have created an environment that is not conducive" to the company continuing to pursue an acquisition of HP Inc. (HPQ). The smaller business equipment maker has withdrawn its tender offer to acquire its larger rival and will no longer seek to nominate a slate of candidates to HP's board.
MAJOR MOVERS: Among the noteworthy gainers was Kinross Gold (KGC), which rose 5% after it said its mines continue to operate and have not materially been impacted by the COVID-19 pandemic. The company also withdrew guidance for fiscal 2020 in light of the outbreak. Also higher was Novavax (NVAX), which gained 3% after Emergent BioSolutions (EBS) announced a pact with Novavax whereby Emergent will provide molecule-to-market contract development and manufacturing services to produce Novavax's NanoFlu, its recombinant quadrivalent seasonal influenza vaccine candidate with its proprietary Matrix-M adjuvant.
Among the notable losers was Capri Holdings (CPRI), which fell 16% after Fitch downgraded Capri to BB+ from BBB- with a negative outlook. In addition, Whiting Petroleum (WLL) plunged 44% after it filed for Chapter 11 bankruptcy protection.
INDEXES: Near midday, the Dow was down 900.29, or 4.11%, to 21,016.87, the Nasdaq was down 297.72, or 3.87%, to 7,402.38, and the S&P 500 was down 114.91, or 4.45%, to 2,469.68.
