Stocks finished near flat amid the continued cross-currents of optimism about the economic recovery and fear about the continued rise in coronavirus cases in the U.S. and now in China once again. Favoring the bearish side of the equation, weekly jobless claims remained above 1.5M for another week, though on the bullish side an index of manufacturing activity in the Philadelphia area came in better than expected.
ECONOMIC EVENTS: In U.S. data, initial jobless claims fell 58,000 to 1.508M in the week ended June 13. The Philly Fed manufacturing index bounced 70.6 points to 27.5 in June, which was much better than expected. The leading economic indicator index bounced 2.8% to 99.8 in May.
In COVID-19 news, New York Governor Andrew Cuomo said he is being advised by his medical advisors to consider quarantines of travelers coming from states with infection spikes, like Florida. The governor noted he has been putting off making a decision, pointing to the irony that other states were imposing mandatory quarantines on New Yorkers, but he is now considering it. On the opposite coast, California Governor Gavin Newsom has issued an executive order requiring its citizens to wear masks in most indoor public settings and outdoors when distancing isn't possible, Associated Press reported.
In D.C. news, The Hill reported that House Democrats unveiled a $1.5T infrastructure plan that calls for a major increase in funding to fix roads and bridges while expanding broadband access in rural areas.
TOP NEWS: Shares of Biogen (BIIB) fell 7.5% after a U.S. District Court ruled in favor of Mylan (MYL) and invalidated the company's Orange Book-listed patent that provided exclusivity into the 2028 timeframe for Tecfidera, Biogen's product approved by the FDA for use in the treatment of multiple sclerosis. Biogen, which has confirmed the unfavorable ruling, said it intends to appeal the court's decision.
Shares of Kroger (KR) were more than 3% lower despite the grocer's report of same-store sales, excluding fuel, rising 19% in the first quarter.
Shares of Carnival (CCL) fell 1.4% after the cruiseline operator's update. While Stifel analyst Steven Wieczynski said preliminary results for Q2 "are somewhat irrelevant at this point given the global pause in ship operations," he also said the company gave updates that provide some positives but also some negatives. Separately, Berenberg analyst Stuart Gordon downgraded Carnival to Sell from Hold with a price target of $10, down from $14.50, calling the stock's valuation "highly unattractive" and the company's capital structure "unsustainable" and in need of an injection of new equity.
Meanwhile, Hertz Global (HTZ) shares were 10% lower after The Wall Street Journal reported that the company is in talks with lenders for a $1B bankruptcy loan. Amid a trading halt for news pending, the car rental company disclosed that the Finance Committee of its board of directors determined that it was in the best interests of the company to terminate the "at the market" offering of up to $500M of its common stock and directed that the stock sale program be terminated.
Additionally, Facebook (FB) was in focus after CNN reported that the social media giant took down advertisements run by President Donald Trump's re-election campaign for violating its policies on hate. The ads, which attacked what the campaign referred to as "Dangerous MOBS of far-left groups," features an upside-down triangle, which the Anti-Defamation League said "is practically identical to that used by the Nazi regime to classify political prisoners in concentration camps," CNN said.
MAJOR MOVERS: Among the noteworthy gainers was Enphase Energy (ENPH), which rose over 17% as analysts remained bullish on the shares following Prescience Point's negative research report on the stock. Also higher was Spotify (SPOT), which rose 12.7% after announcing a new multiyear partnership with Warner Bros. (T) and DC to produce and distribute an original slate of narrative scripted podcasts. The news came after The Wall Street Journal reported yesterday that Spotify has reached a deal with Kim Kardashian West for a podcast about her involvement with the Innocence Project.
Among the notable losers was U.S. Steel (X), which slid 13% after it announced an offering of 50M shares of common stock. Also lower was Hudson (HUD), which fell 7.5% after reporting quarterly results.
INDEXES: The Dow fell 39.51, or 0.15%, to 26,080.10, the Nasdaq gained 32.52, or 0.33%, to 9,943.05, and the S&P 500 advanced 1.85, or 0.059%, to 3,115.34.
