U.S. equities open mixed today - Nasdaq was adding 0.7% while S&P 500 and DJIA were trading just slightly above the flatline. Tech giants now seem to be pushing all indices higher - the popular FANGMAN has been increasing its weight in major indices thus having more impact on American stock markets. At press time, DJIA seems to be losing ground as the index is falling over 1%. Nasdaq is trading flat now.
The number of coronavirus cases in the United States exceeded 3 million. In spite of these terrifying figures investors does not seem to be frightened that much. The weekly jobless claims report turned out to be better than expected which must have made the sentiment a little bit more upbeat. The number of initial jobless claims amounted to 1314k (vs expected 1375k) while continuing jobless claims fell to 18062k in the week ending June 26. Previous readings were slightly revised lower.
S&P 500 (US500) now seems to be stuck in a tight range between 3,230 resistance area and 78.6% Fibo retracement of the February-March drop. Markets might need some catalyst in order to smash through any of these levels. Therefore, one should pay attention to news headlines on Covid-19 or U.S. reopening plans as President Trump explicitly urged to open schools in the fall. Similar actions or disputes might weigh on market sentiment. Source: xStation5
Walgreens Boots Alliance (WBA.US) announced its fiscal third quarter results which came in below analysts’ expectations. The company reported non-GAAP earnings per share of 83 cents, well below market consensus. Covid-19 hit Walgreens’ business particularly in Britain, as a result the firm is set to cut about 4,000 jobs in the UK. It will also suspend its buybacks.
Needham initiated coverage of Alibaba (BABA.US) - Chinese e-commerce giant. Coverage was started with “buy” rating while price target was set at $275 - it implies a 12-month upside of 6.7%. Analysts point out that Alibaba’s “well-stablished ecosystem” as well as “strategic position in the e-commerce value chain” are in favour of the stock.
Wells Fargo (WFC.US) announced that the company is reading thousands of job cuts starting later this year. As Wells Fargo is the largest employer among U.S. banks, the scale of these cutbacks might turned out to be huge. The bank has a workforce of about 263,000 and the firm is said to be significantly less efficient than its largest competitors.
Wells Fargo (WFC.US) shares has had huge problems in the post-Covid world as banks clearly suffer under the circumstances. Massive layoffs might help the financial situation of these institutions, yet the ongoing uncertainty is definitely not in favour of banks. As the second wave of coronavirus might be even worse in the U.S., banks’ provisions could still be on the rise. $22 area should provide some support for now.
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