Stocks are having their worst day in almost six weeks a day after the Federal Reserve offered a dour outlook on the prospects for a "V-shaped" economic recovery. The Fed's dovishness and tempering of the recent enthusiasm that had driven the major averages back to record levels is not being taken well by President Trump, who tweeted that the central bank is "wrong so often." Banks have been among the morning's worst performers after the central bank appeared to indicate that rates may not be raised again for two or more years, while other sectors that have surged in recent weeks - such as airlines, cruise operators, travel companies and energy-linked names - are giving up some of those gains today.
ECONOMIC EVENTS: In U.S. data, initial jobless claims fell 355,000 to 1.54M in the week ended June 6, dropping the four-week moving average to about 2M from 2.29M. The Producer Prices Index report revealed a higher than expected 0.4% headline rise for the final demand measure despite a 0.1% decline for the core reading.
Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now 7.42M confirmed cases of COVID-19 worldwide, including over 2M in the U.S., and 417,546 deaths due to the disease.
TOP NEWS: Shares of GrubHub (GRUB) are about 5% higher at midday after Just Eat Takeaway.com (TKAYY) confirmed an agreement to acquire 100% of the shares of Grubhub in an all-stock transaction. Grubhub shareholders will be entitled to receive American depositary receipts representing 0.6710 Just Eat Takeaway.com ordinary shares in exchange for each Grubhub share, representing an implied value of $75.15 for each Grubhub share and implying a total equity consideration of $7.3B. After the deal was announced, GrubHub CEO Matt Maloney said in an appearance on CNBC that his company's board had "a very easy decision to make" in taking a "much higher offer" with "much more deal certainty." A rival takeover bid from Uber (UBER) was "dramatically different" and a "mid-60s" offer, which is well below the price that Just Eat was willing to pay, Maloney added.
In news regarding the pharmaceutical fight against COVID, Moderna (MRNA) announced progress on late-stage development of mRNA-1273, the company's mRNA vaccine candidate against COVID-19. Moderna said it has finalized the Phase 3 study protocol based on feedback from the FDA and that it expects dosing in the Phase 3 study to begin in July. Meanwhile, Regeneron (REGN) announced initiation of the first clinical trial of REGN-COV2, its investigational dual antibody cocktail for the prevention and treatment of COVID-19. The REGN-COV2 clinical program will consist of four separate study populations: hospitalized COVID-19 patients, non-hospitalized symptomatic COVID-19 patients, uninfected people in groups that are at high-risk of exposure, and uninfected people with close exposure to a COVID-19 patient.
MAJOR MOVERS: Among the noteworthy gainers were Zoom Video (ZM) and Netflix (NFLX), which both were among the best performing stocks during the height of the U.S. lockdowns and could be viewed as beneficiaries if the economy reopens more slowly than has recently been expected. Near noon, Zoom shares are up 2.5% while Netflix shares are fractionally higher.
Among the notable losers were Norwegian Cruise Line (NCLH) and Carnival (CCL), which slid 17% and 16%, respectively. Also lower were American Airlines (AAL), United Airlines (UAL) and Delta Air Lines (DAL), which were down 14%, 14%, and 12%, respectively.
INDEXES: Near midday, the Dow was down 1,380.70, or 5.12%, to 25,609.29, the Nasdaq was down 358.04, or 3.57%, to 9,662.30, and the S&P 500 was down 137.59, or 4.31%, to 3,052.55.
