Fears of a slow economic recovery from the coronavirus-tied recession are dragging down US stock indexes. Fed Chairman Jerome Powell warned that there are risks to employment and GDP growth without an additional aid package. “I would say many, most, [forecasters] assume some fiscal action. Fiscal action underlies many, many current forecasts,” Powell said. In addition, the IHS Markit Eurozone Composite PMI fell for a second successive month in September, dropping from 51.9 in August to 50.1, indicating only a very marginal increase in business activity.
“Having rebounded sharply in July and, to a lesser extent, August from COVID-19 lockdowns during the second quarter, the PMI has since indicated a near stalling of the economy at the end of the third quarter as rising infection rates and ongoing social distancing measures curbed demand, notably for consumer-facing services” IHS Markit stated.
The tech-heavy Nasdaq Composite Index is dropping 1.7%, as stay-at-home tech stocks, including Apple, Amazon and Netflix are down about 3%. The Dow Jones Industrial Average is slipping 0.8%, while the S&P 500 Index is falling 1.1%.
Elon Musk’s Tesla is suffering another day of losses as the bubble around the battery day event burst. Shares are down 7.4% leading the declines on the Nasdaq.
Key announcements included Tesla indicating that the $/kWh on lithium ion batteries is flattening out and not falling quickly enough to lead to higher adoption of electric vehicles. As a result, Tesla revealed plans to take battery production in-house. The electric vehicle maker will continue to use cell suppliers including Panasonic and CATL, but aims to have 100 GWh capacity in 2022 and 3 TWh by 2030.
Following the event, Wedbush analyst Daniel Ives reiterated his Hold rating with a $475 price target.
“This was a massively hyped event for Musk and Tesla and the battery production cost targets were staggering, which if achieved would be a potential game changer for the company’s cost structure and price points going forward. The stock is down on knee jerk reaction as the biggest disappointment of the event from the Street’s perspective was around no million mile battery announcement in our opinion as this was widely expected to be unveiled,” he summed up.
In another setback, Nikola shares are plunging 16% as the Wall Street Journal reported that talks with potential energy partners, including BP PLC, to build hydrogen-refueling stations stalled following recent allegations the electric truck maker had misled investors.
Holiday season is coming around the corner: Walmart is seeking to recruit 20,000 workers ahead of the US holiday season as the world’s biggest retailer is gearing up for a surge in online shopping amid a renewed increase in Covid-19 cases.
In more apparel-related news: Lululemon Athletica is up 2.5% after announcing the resumption of its stock buyback program. The athletic apparel maker’s buyback program, which is due to expire on January 31, 2021, has $263.6 million worth of stock to be repurchased.
Bad day for cannabis: Aurora Cannabis is losing 25% as the company revealed a revenue decline in fiscal 4Q, with losses accelerating into 1Q as its value offering struggles. Aurora and several other Canadian cannabis companies are struggling due to competition from the illicit market, lower-than-expected retail stores and slow international growth.
Corona updates: AstraZeneca’s late-stage coronavirus vaccine trial in the US is still on hold as federal investigators seek “answers to important questions” over its safety for patients, Health and Human Services Secretary Alex Azar told CNBC. Clinical trials for AstraZeneca’s Covid-19 vaccine, called AZD1222, were halted on Sept. 6 after one of the participants in the UK reported a serious adverse reaction.
Johnson & Johnson shares are up 1.3% after the healthcare company announced that it is kicking off with a large-scale, pivotal, multi-country Phase 3 trial of its COVID-19 vaccine candidate, JNJ-78436735. The initiation of the trial follows positive interim results from its Phase 1/2a clinical study, which showed that the safety profile and immunogenicity after a single vaccination were supportive of further development.
In what marks another step in the right direction, RedHill Biopharma received approval from Brazil’s health regulator for its global Phase 2/3 study, which evaluates its proprietary inhibitor called opaganib in patients hospitalized with severe COVID-19 pneumonia. The Phase 2/3 study, has a target of enrolling up to 270 patients requiring hospitalization and treatment with supplemental oxygen.
