Market Snapshot: Dow on pace to book losses as investors monitor reopening efforts

What’s driving the market?

New clusters of COVID-19 cases have emerged in countries that have begun to lift restrictions imposed to contain the spread of the disease, a development analysts said may be giving investors pause as U.S. states begin loosening lockdowns in a bid to reopen the economy.

In Wuhan, the Chinese city where the coronavirus first emerged late last year, six people tested positive over the weekend, ending a stretch of more than a month that had seen the Hubei province report zero infections, The Wall Street Journal reported.

Dr. Anthony Fauci, the U.S. government’s leading infectious diseases doctor, warned that the country faces “needless suffering and death” if the nation reopens too early during the coronavirus pandemic, as top health officials emphasized in Senate testimony on Tuesday the need to move with caution and expand testing.

“Markets are being driven day-to-day by news of easing economic restrictions and what that looks like,” said Mark Saylor, portfolio manager at Penn Mutual Asset management in an interview. “You’ve had some positive data out of the New York region, but you’re seeing spikes and incidents in areas that maybe are opening too early.”

Worries about geopolitical tensions resulting from the pandemic may have contributed to the stock-market decline in the afternoon, after Bloomberg News reported Republican senators were moving towards a vote to sanction Chinese officials over Beijing’s mistreatment of Uighur minorities in Xinjiang, China. This comes on the heels of reports that the Trump administration was ordering the Federal Retirement Thrift Board to halt its investments in Chinese stocks.

“We expect China to be back in the headlines for many reasons, not the least of which is its politically advantageous for Trump to take a hard line against China,” Katie Nixon, chief investment officer of Northern Trust Wealth Management, told MarketWatch.

See: States start to reopen, ending coronavirus lockdowns

The lockdowns of business and travel to combat the coronavirus pandemic may lead to a major U.S. airlines “most likely” going bankrupt, Boeing Co.BA, -2.29% Chief Executive David Calhoun said during an interview aired on NBC’s “Today” show Tuesday. Calhoun didn’t identify any carrier, and Bloomberg News quoted a Boeing spokesman as saying the CEO wasn’t referring to any airline in particular. Calhoun said airlines won’t be back to even 25% business by the autumn, and “maybe by the end of the year we approach 50 [percent].”

To provide support for business during the coronavirus crisis, the Federal Reserve Bank of New York began buying corporate-bond, exchange-traded funds Tuesday, marking a historic expansion of the central bank’s efforts to support the economy and financial system during the most significant financial crisis in nearly a century sparked by the COVID-19 pandemic.

Read: Bond ETFs jump as Fed wades into the market

Even before the Fed began deploying funds, investment-grade U.S. companies were borrowing at a record clip to start the year, with Goldman Sachs analysts now forecasting issuance for 2020 to reach an all-time high of $1.5 trillion.

In U.S. economic data, the U.S. National Federation of Independent Business on Tuesday said its gauge of small-business optimism fell 5.5 points to 90.9 in April. Economists had expected a reading of 84.8, according to Econoday. April federal government budget figures are due at 2 p.m. Eastern.

Data showing U.S. consumer prices, excluding food and energy, also fell by 0.4% in April from March, marking the largest monthly decline since 1957 when the government created the measure. Economists were expecting just a 0.2% decline, according to a MarketWatch poll.

Minneapolis Federal Reserve Bank President Neel Kashkari warned in a Tuesday morning talk that the U.S. economy is unlikely to rebound quickly, while urging the U.S. government to take advantage of low interest rates to spend in support of the economy. Fed Vice Chairman Randal Quarles on Monday told the Senate Banking Committee that the central bank will use whatever powers necessary to support the U.S. banking system.

Cleveland Fed President Loretta Mester is scheduled to speak at an event in Chicago at 5 p.m. Eastern.

Which companies are in focus?
  • Tesla Inc.TSLA, -0.03% chief Elon Musk on Monday escalated a showdown with local health authorities and reopened the company’s Fremont, Calif., car-making plant beyond minimal operations. President Trump also threw some support to Musk via Twitter. Shares of the auto manufacturer rose 1.9% Tuesday.
  • Shares of Tilray Inc.TLRY, -7.92% fell 5.8% after the British Columbia-based cannabis company reported a wider-than-expected net loss late Monday, but said the COVID-19 pandemic has not materially hurt its ability to sell pot to medical patients and recreational customers.
  • Shares of Apple Inc. AAPL, -0.75% rose slightly after Wedbush analyst Dan Ives raised his price target from $335 to $350, putting the company’s stock on track for a seventh consecutive gain.
  • Hertz Global Holdings Inc. HTZ, -8.77%announced first-quarter earnings late Monday that showed deepening losses. Shares were 5% lower Tuesday.
  • Shares of GrubHub Inc. GRUB, +29.94% were more than 34% in Tuesday morning trading after Bloomberg News reported that Uber Technologies Inc. UBER, +3.33% has made an offer to acquire the food-delivery company.
  • Facebook, Inc. FB, -0.85% shares advanced again Tuesday and were on pace for their highest close since Feb. 19, when the stock finished at $217.49, according to Factset data.
  • Shares of Chesapeake Energy Corp. CHK, -13.95% plunged another 13% Tuesday, a day after the oil and gas producer re-issued its “going concern” warning. The stock is down around 93% year-to-date.
How are other markets trading?

Crude oil prices finished higher Tuesday, with West Texas Intermediate Crude for June delivery CLM20, +6.83% up $1.64, or 8%, to settle at $25.78 a barrel. In precious metals, the price of an ounce of May gold GCM20, +0.35% gained $9.10, or 0.5% to end at $1,704.40.

The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 0.675%was down about 4 basis points to 0.68%.

The U.S. dollar lost ground against a basket of six rivals, with the ICE U.S. dollar index DXY, -0.32% down 0.3%.

In Europe, stocks were trading mostly higher, with the Stoxx Europe 600 SXXP, +0.25% booking a gain of 0.3% and the U.K.’s FTSE 100 UKX, +0.92% up 0.9%.

In Asia overnight, stocks closed mostly lower, with China’s CSI 300 000300, +0.00% virtually unchanged, Hong Kong’s Hang Seng index HSI, -1.44% down 1.5% and Japan’s Nikkei NIK, -0.11% losing 0.1% lower.

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