Stock market live updates: Dow up 250, stay-at-home stocks sink, banks and retail rally

Stocks trimmed early gains on Wednesday morning as tech shares fell, pulling the Nasdaq into negative territory. The reopening trade had another strong start, led by travel stocks such as airlines. All three large cap indexes and the Russell 2000 were looking to extend gains from Tuesday. Here’s what’s happening.

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The U.S. unemployment rate likely will remain well above that of other nations because of the way it has handled the job crisis associated with the coronavirus pandemic, according to Goldman Sachs. In the near term, Goldman sees the jobless level peaking at 25% then falling to 12% by the end of the year but still staying around 8% as 2021 closes. That’s because while other countries subsidize employers to continue paying workers, the U.S. – and Canada – have focused more on providing payment to displaced workers, in many cases above what they were making. While the firm expects the situation to weigh on the recovery, it also said the payments will continue to provide households with disposal income that will help boost growth. – Cox

S&P Global said the number of potential debt downgrades is at an all-time high. The firm said there are now 1,287 issuers, rated AAA to B-, on the potential downgrade list. They either have negative outlooks or ratings on CreditWatch with negative implications. The number surpassed the previous record of 1,028 from April, 2009.

The ratings agency said it added 550 issuers since March, including 490 facing direct economic impact from the pandemic, mostly from financial institutions, consumer products and utilities. It also removed 123 issuers from its list, with 110 of those downgraded.

In the last month, the ratings of 247 issues from the list were lowered and 134 of those remain on the list for potential downgrade. About 64% of those on the list have risk from the impact of coronavirus-related containment measures to their operations.

“Generally, we expect heavy credit erosion in coming months as issuers, especially those in the lower-rated spectrum come under heavy fire from poor earnings, continued difficulties in managing cost structures, and market volatility creating limited funding opportunities,” said Sudeep Kesh, head of S&P Global Credit Markets Research. – Domm

Shares of Tractor Supply have gained more than 45% since March 16, making it the top-performing retailer since lockdown measures went into effect. The farming supply retailer has seen its sales surge. On Tuesday in an earnings preannouncement, the company said it expected record-breaking sales and earnings in the current quarter, and that comparable store sales would grow by 20% to 25%. The company is set to report second quarter earnings on July 23. Shares traded more than 4% higher on Wednesday. – Stevens, Hum

The S&P 500 joined the Nasdaq in negative territory, falling 0.4% below where it closed on Tuesday, as tech stocks lost ground. The Dow has also retreated from earlier gains but it still up more than 80 points for the session. —Pound

• Jefferies initiated Freshpet as buy.
• Argus downgraded Pinterest to hold from buy.
• UBS downgraded Brown-Forman to sell from neutral.
• Citi raised its price target on Facebook to $275 from $245.
• Baird downgraded Hyatt to neutral from outperform.
• Evercore ISI upgraded Dentsply Sirona to overweight from in line.
• Susquehanna upgraded Hibbett Sports to positive from neutral.
• Jefferies raised its price target on Apple to $370 from $350.
• Wedbush raised its price target on Tesla to $800 from $600.

Pro Subscribers can read more here. —Bloom

Twitter shares hit their session lows in midmorning trading, falling about 4%, after President Donald Trump threatened to take action against the social media platform. On Tuesday, Twitter slapped Trump’s tweets about mail-in ballots with a warning label. “Get the facts about mail-in ballots,” said Twitter’s warning labels below two of Trump’s tweets. “Twitter has now shown that everything we have been saying about them (and their other compatriots) is correct. Big action to follow!,” Trump said in a tweet. —Imbert

Stocks that benefited from people staying at home amid the coronavirus pandemic fell broadly as investors grew more optimistic about the economy reopening. Zoom Video and Shopify both dropped more than 5%. Amazon and Netflix slid 1.9% and 2.3%, respectively. Teladoc Health traded 7.8% lower. These stocks are still up at least 25.1% for the year, however. —Imbert

The SPDR S&P Bank ETF (KBE) and the Regional Banking ETF (KRE) are both up about 5% as bank shares rallied on hope of the economy reopening. Those gains put both ETFs up more than 13% for the week and on pace for their biggest weekly gains since April. Citizens Financial, Regions, Truist, Citigroup and Wells Fargo drove those gains, jumping at least 14% this week. —Imbert, Francolla

Major U.S. stock indexes opened sharply higher Wednesday morning as investors continued to cheer efforts across the United States to reopen portions of the economy. The Dow gained 350 points, or 1.4%, at the opening bell while the S&P 500 gained 0.9%. Gains were led by the equities of companies that would benefit most under a full reopening, including airlines, retailers and cruise line operators. Goldman Sachs and JPMorgan Chase led the Dow higher while Alaska Air, American Airlines, United Airlines, Carnival and Nordstrom carried the S&P 500 back above 3,000. — Franck

Data released by Bank of America showed the bank’s clients were net buyers of U.S. stocks last week as hope around the economy reopening grew. Institutional investors drove the biggest inflows into U.S. stocks, adding $1.97 billion to their stock positions. Corporations increased their equity exposure by $277 million. However, those inflows were offset by hedge funds pulling $920 million out of stocks while retail clients took $570 million from the equity market. —Imbert, Bloom

As states reopen their economies, Barclays combed through different data sets in order to assess how quickly life is getting back to normal. The firm found some encouraging signs, but noted that there’s still a far way to go. For instance, Barclays found that S&P 500 company employees are gradually beginning to return to work. The median staffing pare back for companies within the benchmark index now stands at almost 90%, compared with a 95% reduction in mid-April. The firm also highlighted findings from its so-called “National Activity Index,” which measures foot traffic in areas like hospitality and leisure, health care, retail, manufacturing and professional services. Barclays found that the index “remains significantly depressed from its February 2020” reading, but noted that it has rise from -52% to -48% since the end of April. –Stevens

Several Wall Street analysts raised their price targets for Apple on Tuesday, led by Jefferies raising its target to $370 per share form $350, tying a Street-high. Jefferies analysts said in a note that web traffic data showed strong demand for the iPhone SE, suggesting that conensus estimates for iPhone sales is too low. Bank of America said in a note that it was bullish on Apple’s services growth and raised its target to $340 from $320, wile Deutsche Bank pushed its mark to $320 from $305, citing CNBC’s report that Apple is reopening roughly 100 physical retail stores this week. The stock, which closed at $316.73 per share on Tuesday, has gained 0.5% in premarket trading. —Pound

Wedbush analyst Dan Ives hiked his price target on electric car  maker Tesla to $800 per share from $600 per share, noting “storm clouds [are] starting to clear” for the company. “The company took a major step forward around fulfilling demand and production concerns with the Fremont artery now up and running after the Musk vs. Alameda County stand-off got resolved,” Ives said, adding that underlying demand for Tesla’s Model 3 in China is still strong. Ives’ new price target is below Tesla’s previous closing price of $818.87. —Imbert

The European Commission announced Wednesday plans for a 750 billion euro ($826.5 billion) recovery fund as Covid-19 continues to hit worldwide economies. The details of the fund have not been decided, with France and Germany in favor of issuing mutual EU debt, while nations including Austria and Sweden are in favor of issuing loans instead. On June 18 leaders from the 27 EU member states will meet to finalize the details of the fund. —Amaro, Stevens

People filing applications for mortgages to buy a home jumped 9% last week compared with the prior week, according to data from the Mortgage Bankers Association, in the sixth straight week of gains. Applications are now up 54% since early April, in yet another sign that the economy is recovering. On Tuesday data showed that new home sales rose slightly in April, after analysts had been expecting a 22% drop. —Stevens

Shares of major retailers, airlines and cruise line operators rose in premarket trading Wednesday as Wall Street continued to cheer U.S. efforts to reopen portions of its economy. Retailers Gap and Kohl’s rose 5.8% each before the opening bell; Carnival and Norwegian Cruise Line rose 15.9% and 13.9%, respectively; while Delta, United and American rose 7.2%, 9.5% and 9.9%. The Dow and S&P 500 have climbed back to near key market levels this week on trader hopes that consumer habits, derailed in March and April thanks to Covid-19, may soon be back to normal. —Franck

Industrials giant Boeing is preparing to announce 2,500 voluntary layoffs later this week, according to a report from The Wall Street Journal citing union officials. The cuts, which will center around the company’s Seattle-area factory, could be announced as early as Friday, the WSJ said, and will be the first phase of broader cuts. The coming announcement follows commentary from the company in April, during which the embattled airplane manufacturer said it was considering a number of options, including reducing its 160,000-strong payroll by around 10%. At the time, the company had not yet reached a final decision. The stock was about 3% higher in premarket trading. —Stevens

U.S. stocks were headed for sharp gains at Wednesday’s open as traders grew more hopeful about the economy reopening. Dow Jones Industrial Average futures rallied 354 points, or 1.4%. S&P 500 futures gained 1.1% while Nasdaq 100 futures traded 0.5% higher. Stocks that would benefit from the economy reopening — such as Carnival, Disney and JPMorgan Chase — were all higher in the premarket. Wednesday’s gains came after stocks surged in the previous session. —Imbert

—With reporting from Silvia Amaro, Jesse Pound, Patti Domm, Jeff Cox and Michael Bloom. 

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