The S&P is sliding a bit this morning from its early-June highs, though many of the sectors hit hard by the virus and shutdowns continue to climb as more and more lockdowns ease. Airlines are a big gainer today, while cruiselines and hotels continue doing well this week amid the reopening optimism. Meanwhile, in Europe, the region's central bank kept its key interest rates steady and announced a higher cap for its pandemic response stimulus program.
ECONOMIC EVENTS: In U.S. data, initial jobless claims fell 249,000 to 1.88M in the week ended May 30. The trade deficit widened by less than expected to an 8-month high of $49.4B in April. The first quarter productivity estimate was boosted by more than expected to a 0.9% contraction rate from a prior estimate of a decline of 2.5%.
In Europe, the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged. The ECB also announced that the envelope for the pandemic emergency purchase program, or PEPP, will be increased by EUR 600B to a total of EUR 1.35T. "In response to the pandemic-related downward revision to inflation over the projection horizon, the PEPP expansion will further ease the general monetary policy stance, supporting funding conditions in the real economy, especially for businesses and households. The purchases will continue to be conducted in a flexible manner over time, across asset classes and among jurisdictions," the central bank said.
TOP NEWS: Shares of TD Ameritrade (AMTD) rose 5% after Charles Schwab (SCHW) announced that on June 3 the Antitrust Division of the United States Department of Justice informed Schwab that the DOJ has decided to close its investigation of Schwab's proposed acquisition of TD Ameritrade. Subject to satisfaction of certain conditions, both companies continue to expect that their merger transaction will close in the second half of the year. Shares of Charles Schwab were 2% higher after the news.
In other M&A news, Reuters reported that the board of LVMH (LVMUY) met to discuss the impact from COVID-19 on the company's acquisition of Tiffany (TIF), with such discussions establishing a potential attempt to review deal terms. LVMH is reportedly seeking ways to reopen deal talks and could try to pressure Tiffany to lessen the agreed upon deal price of $135 per share by delving into its compliance with financial covenants. CNBC then reported that Tiffany is prepared to litigate if LVMH seeks a price cut, though LVMH has yet to propose any actual deal term changes to Tiffany. Meanwhile, LVMH later issued a statement that the company is not considering buying Tiffany shares on the market.
Amazon (AMZN) was in focus after Reuters reported that the company is in early-stage talks to acquire a stake worth at least $2B in Indian mobile operator Bharti Airtel. The news comes after Amazon announced last night the lease of 12 Boeing (BA) 767-300 converted cargo aircraft from Air Transport Services Group (ATSG). Shares of Air Transport have jumped 9% after the news.
On the earnings front, Fossil (FOSL) shares surged 13% after the company reported first quarter results, though the company said that worldwide second quarter net sales are expected to decline in the range of 60%-70%.
Meanwhile, shares of eBay (EBAY) rose 8% after the company reported "stronger" global gross merchandise volume in April and May and raised its Q2 adjusted earnings per share and revenue guidance. The e-commerce giant added that its business is performing "significantly better than expectations" shared in its prior earnings report.
MAJOR MOVERS: Among the noteworthy gainers was Anavex (AVXL), which rose 7% after it received approval to expand the Phase 2b/3 double-blind, randomized, placebo-controlled safety and efficacy trial of ANAVEX 2-73 for the treatment of early Alzheimer's disease into Canada and U.K. Also higher was G-III Apparel (GIII), which gained 11% after reporting quarterly results.
Among the notable losers was J.M. Smucker (SJM), which slid 4% after the company reported quarterly results and provided fiscal 2021 guidance. Also lower after reporting quarterly results was Smartsheet (SMAR), which fell 22%.
INDEXES: Near midday, the Dow was down 68.03, or 0.26%, to 26,201.86, the Nasdaq was down 59.93, or 0.62%, to 9,622.98, and the S&P 500 was down 14.92, or 0.48%, to 3,107.95.
