American equities opened flat today. Nevertheless, moods significantly improved following Gilead Sciences (GILD.US) announcement just before the market open. The company published new data on its antiviral drug remdesivir which shows that treatment reduced the risk of death for infected people by 62%. Shortly after the catchy headline, futures markets initiated a modest rally as investors clearly look for this kind of news in current market conditions. At press time DJIA and S&P 500 are posting some minor gains while Nasdaq lags.
Despite optimistic news about Covid-19 drug, investors certainly weigh spike in coronavirus cases as well. United States reported yet another record of 63,247 new infected people in a 24-hour period (John Hopkins University data). According to a CNBC analysis, cases were growing aby at least 5% in 36 states. From the data front: the U.S. Bureau of Labor Statistics released its PPI reading today. The Producer Price Index unexpectedly fell 0.2% in June after a 0.4% gain in May. Core PPI fell as much as 0.3% MoM (vs expected: +0.1% MoM).
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S&P 500 (US500) managed to recover some losses during yesterday’s session. Even though the index ended the day into the red, US500 did not form a bearing signal (orange circle). As U.S. stocks are accelerating an upward movement on Covid-19 drug hopes, the 78.6% retracement of the February-March drop still serves as a short-term support. As of writing, the index is subtly touching this barrier. Should the index broke below, the downward move could potentially accelerate. Source: xStation5
Gilead Sciences (GILD.US) were gaining in the pre-market trading today after positive mortality and recovery data in coronavirus treatment study. The data proves a 62% reduction in mortality rates after remdesivir treatment. Stocks are currently rising over 2%.
Walt Disney Co (DIS.US) is set to open its Walt Disney World in Orlando, Florida tomorrow amid the ongoing coronavirus spike in the U.S. As the turmoil in the South (also in Florida) is particularly bad, Disney is still readying to open its theme park’s gates to guests. Reopening of the Disneyland in California was delayed though.
Ford Motor Co (F.US) may have to shut some car plants in the U.S. next week due to lack of engines from Mexico - said Christopher Landau, the U.S. ambassador to Mexico. According to Landau, a senior Ford executive was concerned about the engines producer in Chihuahua state where industrial capacity is now limited to 50%. As Mexico is a key part of a wider international supply chain, Ford may be forced to shut some plants if they fail to receive engines from Chihuahua state.
Ford Motor Co (F.US) shares fell over 50% due to February-March sell-off. As the car producer has been facing some supply issues these days, stock is once again starting to lose ground. The current coronavirus spike in the U.S. is a huge risk factor as potential restrictions might force executives to close some plants or at least reduce capacity. Apart from that, rising coronavirus cases is some emerging markets effectively jeopardize global supply chains that are crucial for the manufacturer. Should shares decline even further, the 23.6% Fibo retracement should serve as a support level ($5.20 area) Source: xStation5
Amazon (AMZN.US) and Netflix (NFLX.US) were upgraded at bulge bracket banks. Citi raised its price target on Amazon to $3,550 from $2,700 while Goldman Sachs raised its price target in Netflix to $670 from $540. Worth mentioning that Netflix will report its results next Thursday.
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