US OPEN: Stocks extend losses as Texas rolls back its reopening

5:45 PM June 26, 2020

The end of the week has brought mixed moods on global stock markets. Even though European stocks opened in the green today, positive sentiment deteriorated in some regions. For instance, CAC 40 and FTSE 100 are still trading higher, but DAX turned negative. Concerns about COVID-19 seem to be playing dominant role recently as the US recorded almost 40 thousand new confirmed cases yesterday - a new record daily high. 

US major indices opened today’s session lower. Among laggards one can find some big banks. Federal Reserve ordered these financial institutions not to buy back stock in the third quarter. Apart from that, their dividend payouts were capped - these steps are supposed to ensure that the financial sector will manage the potential loan losses resulting from the current crisis. 

S&P, DJIA and Nasdaq extended losses after Texas Governor announced that he will roll back some of the state’s reopening. Restrictions will involve bars, restaurants, rafting businesses and outdoor gatherings of 100 or more people. Action is expected to restrain rising coronavirus cases and hospitalisations. Apart from that, investors were offered revised Michigan University data. The headline Michigan Consumer Expectations was revised down to 78.1 in June (preliminary: 78.9). 

S&P 500 (US500) extended loses in the first hour of today’s trading. 200-period moving average may be seen as a support now, yet moods clearly deteriorated after Texas Governor speech. One should definitely keep track of the newsflow as some US states may impose similar restrictions, which could be a potential catalyst for further declines. Source: xStation5

After yesterday’s session, Nike (NKE.US) published its fourth-quarter (ended May 31) earnings report. Investors were served rather disappointing data as the company reported an unexpected quarterly net loss of $790 million or 51 cents per share. Revenue was down 38% YoY to $6.31 billion. Worth mentioning, sales in North America declined 46% while sales in Chine were down  mere 3%. Digital sales soared 75% which is no surprise due to lockdown that was imposed worldwide. Nevertheless, Nike shares slid 3% after the opening bell today. 

Nike’s recovery may be regarded as a V-shaped one. Nevertheless, yesterday’s earnings report caused the stock to pullback. 78.6% Fibo retracement ($95.60 area) of the February-March drop may be regarded as a short-term support. Source: xStation5

Microsoft (MSFT.US) announced new approach to retail. The company will permanently close its physical locations. The firm promised to invest in digital innovation e.g. video chat support, online tutorial videos and virtual workshops. Microsoft Vice President said: “Our sales have grown online as our product portfolio has evolved to largely digital offerings, and our talented team has proven success serving customers beyond any physical location.” Stores closure will result in a pre-tax charge of roughly $450 million or $0.05 per share - it includes asset write-offs and impairments.

Amazon (AMZN.US) is set to acquire Zoox - self-driving technology company. As a result, Amazon has just taken another step into its self-driving vehicles business expansion. In 2018 Zoox was valued at roughly $3.2 billion, but the company has been struggling with some problems in recent months - the firm cut about 100 jobs in April. 

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