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The number of U.S. fatalities from the coronavirus that causes the disease COVID-19 climbed above 73,000 on Thursday, as President Donald Trump’s administration reportedly confirmed it is shelving recommendations from the Centers for Disease Control and Prevention on reopening safely because they were too cautious.
The Associated Press was first to report that the government had rejected the advice of its own public health agency and had told the CDC a draft guide on reopening schools, restaurants, summer camps, churches, day-care centers and more “would never see the light of day.” The recommendations included detailed flow charts to be used by local officials.
The news comes as an impatient Trump has repeatedly pushed for states to reopen, supported protests against lockdowns and other restrictions and contradicted medical advice from experts on the task force created to manage the pandemic.
See:U.S. public health experts increasingly fretful as states press ahead with reopenings
“Local leaders and small businesses are looking to Washington for help [in] ensuring safety for themselves, their workers and their customers as this pandemic continues to ravage the country,” said Kyle Herrig, president of Accountable.US, a nonpartisan group. “Instead of offering them assistance, Trump is opting to hide the expertise of his own administration’s scientists and public health professionals. What could Trump possibly gain by hiding this guidance, besides covering up his rush to reopen and his administration’s failures with the COVID-19 response?”
On Wednesday, the president backed off plans to wind down the task force after a backlash from Democrats, public health officials and experts, coming at a time when the U.S. infection rate is still growing, including in states that have started to allow small businesses and shops to reopen.
Trump acknowledged that reopening will cause more deaths, but has pressured state governors to move quickly to restore an economy that has been hit hard by stay-at-home orders, closed stores and plants and other restrictions.
Governors continue to push for more and better testing, looking to other countries like Germany and South Korea that have used a disciplined, scientific approach to testing and contact tracing allowing them to restore some activity while successfully containing the spread.
On Thursday, German Chancellor Angela Merkel said the country’s infection numbers were lower than two weeks ago and that Germany was now in a good position to reopen most of its economy. “We can afford a little audacity,” Merkel told reporters at a news conference, according to the New York Times.
The biggest nurses trade union in the U.S. is planning a protest later Thursday in which members will line up white shoes outside the White House in a criticism of its handling of the crisis, the Guardian reported. Many frontline workers were infected by their own patients because of a critical shortage of personal protective equipment, or PPE, the masks, gloves and gowns that medical workers need to be safe.
Latest tallies
There are now 3.78 million cases of COVID-19 worldwide and 264,406 people have died, according to data aggregated by Johns Hopkins University.
More than 1.2 million people have recovered.
The U.S. has the highest case toll at 1.23 million and the highest death toll at 73,566. Spain has the highest number of cases in Europe at 220,325 and 25,857 deaths. Italy has 214,457 cases and 29,684 deaths.
The U.K. has 202,359 cases and 30,150 deaths, the highest death toll in Europe.
Russia moved past France and Germany after another spike in cases overnight. Russia now has 177,160 cases and 1,625 deaths.
France has 174,224 cases and 25,812 deaths. Germany has 168,276 cases and 7,277 deaths. Turkey has 131,744 cases and 3,584 deaths, followed by Brazil with 126,611 cases and 8,605 deaths. Iran has 103,135 cases and 6,486 deaths. China, where the disease was first reported late last year, has 83,974 cases and 4,637 deaths.
What’s the economy saying?
In economic news, another 3.2 million Americans applied for jobless benefits last week, bringing the seven-week tally to 33 million, as MarketWatch’s Jeffry Bartash reported. The states of California, Texas, Georgia, Florida, and New York reported the biggest increases in new claims, according to the Labor Department. California, the largest U.S. state, has received the most jobless claims overall.
A separate report by large payroll processor ADP on Wednesday said more than 20 million jobs were eliminated in April, at least temporarily. The federal government’s official employment summary is expected to show a similarly large wipeout when it’s released Friday morning.
The federal government has sharply increased unemployment benefits, loosened eligibility standards and is effectively paying many companies to keep idled workers on payrolls until the crisis fades, but millions of jobs could be permanently lost as thousands of companies fail.
“That’s one in five jobs likely gone in seven weeks,” said Nick Bunker, director of economic research at Indeed Hiring Lab. “The outlook for the labor market remains frightening. Not only does the pace of layoffs remain at unprecedented levels, but hiring intentions remain depressed.”
What are companies saying?
The latest batch of earnings reports sparked some big stock moves, even as companies are not offering guidance given the uncertainty surrounding the pandemic and are still laying off or furloughing staff and raising cash to boost liquidity positions.
Lyft Inc. LYFT, +23.20% shares were last up 22%, after it reported better sales than expected for the first quarter. But the ride-sharing company, which has laid off 928 staffers and furloughed another 288, posted a loss of nearly $400 million, or $1.31 a share, due to a steep decline in ridership. The loss was wider than analysts expected.
“While the COVID-19 pandemic poses a formidable challenge to our business, we are prepared to weather this crisis,” Chief Executive Logan Green said. “We are responding to the pandemic with an aggressive cost-reduction plan that will give us an even leaner expense structure and allow us to emerge stronger.”
Payments companies PayPal Holdings Inc. PYPL, +13.07% and Square Inc. SQ, +12.53% had different quarters, with PayPal telling MarketWatch that April was “probably the strongest month for PayPal” since it became a standalone public company in mid-2015. Square the story is more complicated. The company benefited from digitally oriented services like the consumer-focused Cash App in the first quarter, but it’s taking time for Square to help transition merchants that traditionally relied on in-store sales over to online tools that can drive business during lockdowns.
For more, read: PayPal and Square see improvements in April, but Square has a longer road ahead
Peloton Interactive Inc. shares PTON, +13.39% soared 14% after it posted a 66% rise in quarterly sales, thanks to a surge in sales for its exercise bikes in the last few weeks of the quarter, as shelter-in-place orders kept people indoors. But losses also grew as the company faced unexpected costs, including for shipping its bikes amid an increase in overall shipping. Peloton lost $55.6 million, or 20 cents a share, up from $38.6 million a year ago. Analysts on average were expecting a loss of 18 cents a share, according to FactSet.
Higher expenses aren’t Peloton’s only issue with shipping. The company said that it is struggling to get orders to customers, and also expects that to continue, along with the temporary pause in sales of its treadmills.
For more, read:Peloton stock heads for record high after reporting surge in pandemic purchases
Mobile videogame publisher Zynga Inc. ZNGA, -4.59% posted a narrower loss and big jump in sales, also benefiting as Americans stay home. Chief Executive Frank Gibeau called it “a broad-based win” in a phone interview with MarketWatch before the results were announced.
Although Gibeau acknowledged the economy is in “totally unfamiliar territory,” he said a “tremendous number of people have been reactivated back into the habit of playing,” and predicted “a lot of the momentum from shelter-in-place playing will probably” show up in the second quarter.
That stock fell however, failing to capture the gains enjoyed by rivals Activision Blizzard Inc. ATVI, +0.39% and Electronic Arts Inc. EA, +0.96% earlier this week.
Elsewhere, retailers began to offer an update on store reopenings with most taking a very gradual approach. General Motors announced a bond offering, and Zoom Video Communications Inc. acquired Keybase, a secure messaging and file-share company. The deal “will accelerate Zoom’s plan to build end-to-end encryption that can reach current Zoom scalability,” the company said in a release.
Here’s the latest on what companies are saying about COVID-19:
• Bausch Health Companies Inc. BHC, -4.67% reported a wider net loss and a surprise decline in revenue given the negative effects of the pandemic. For 2020, the company lowered its revenue guidance range to $7.80 billion to $8.20 billion from $8.65 billion to $8.85 billion, which compares with the FactSet consensus of $8.40 billion.
• Apparel retailer Buckle Inc.’s BKE, +4.20% sales fell 81% in the fiscal month ending May 2 to $11.4 million, as the pandemic shuttered stores. For the first quarter ending on that day, sales were $115.4 million, down from $201.3 million from the previous year and below the FactSet consensus of $138.0 million. Online sales rose 31.5% to $32.1 million. During the week of April 26, Buckle began to reopen stores with 37 back in operation. Another 100 stores will reopen during the week of May 3. Due to the store closures, the company doesn’t plan to report same-store sales. First-quarter earnings are scheduled for May 22.
• Carvana Co. CVNA, +7.66% posted a wider-than-expected adjusted loss for the first quarter and sales fell short. The year was “off to a very strong start, and prior to the COVID-19 outbreak we were on track to meet or exceed our annual guidance on all key financial metrics,” the company said. Carvana has withdrawn its guidance.
• Dish Network Corp. DISH, +3.84% missed profit estimates for the first quarter, but revenue beat expectations. The satellite TV company, which is planning to launch a 5G wireless phone service, said the pandemic caused “severe disruption” in segments it serves, including the hospitality and airline industries. The company paused service or offered temporary rate relief to about 250,000 subscribers in the quarter. It ended the quarter with 11.32 million pay-TV subscribers. Net pay-TV subscribers declined by about 413,000 in the quarter.
• Etsy Inc.’s ETSY, -3.24% sales of face masks led to huge growth in April sales, but first-quarter earnings disappointed. The online crafts marketplace projected much bigger returns in the second quarter, thanks to sales of face masks by Etsy sellers. “After a volatile March, Etsy experienced a dramatic shift in demand during the month of April as global buyers turned to Etsy for cloth face masks given updated guidelines to slow the spread of COVID-19,” the company disclosed in its announcement, which said that gross merchandise sales jumped 130% in April after increasing 32.2% in the first quarter. Etsy forecast second-quarter revenue of $310 million to $340 million, which would be sales growth of up to 90% and trounces the analyst consensus for second-quarter sales of $213.5 million
• USA Today parent Gannett Co. GCI, -8.73% reported a first-quarter loss that widened and revenue that more than doubled, as a result of the New Media Investment Group Inc.’s acquisition of Gannett, which was completed in November. The company is suspending its dividend to preserve liquidity amid the economic disruption and uncertainties caused the COVID-19 health crisis. “The impact on our business from the pandemic came fast and is significant,” said Chief Executive Michael Reed. “We have also moved aggressively to manage through the current economic crisis by taking measures to preserve and increase liquidity and financial performance, including further cost reductions, limits on capital expenditures, and the suspension of our quarterly dividend.”
• Gap Inc. GPS, +8.08% plans to open 800 stores by the end of May, starting with select Texas locations this weekend. The store re-openings will be across the company’s portfolio of chains including Old Navy, Banana Republic and Athleta. “Ship from store” service will be available at 1,000 stores and curbside pickup at 75, with plans to expand those services. Stores will open with coronavirus-related measures, including signage to encourage social distancing, reduced hours, and a 24-hour quarantine on returns, such that items won’t return to the sales floor right away.
• Fitch Ratings downgraded General Motors Co.’s GM, +4.11% long-term issuer default rating to BBB-minus from BBB, putting it one notch above junk status. The rating agency also downgraded GM Financial’s IDR to BBB-minus, and said both ratings outlooks are stable. The move is based on the expectation that the auto giant’s credit profile will remain weak for a prolonged period, against the macroeconomic environment caused by the pandemic. “The company’s more concentrated operations, with its automotive FCF completely dependent on the North American and Chinese auto markets, could also pose some risk in the future, although it has resulted in less cash burn in the current environment.” GM’s ratings and stable outlook reflect the company’s strong liquidity position and the expectation that it will retain and investment-grade rating once the peak of the pandemic has passed.
• Hilton Worldwide Holdings Inc.’s HLT, +1.46% first-quarter adjusted profit beat expectations, but revenue fell shy of forecasts as the pandemic cratered occupancy and management and franchise fees. Revenue per available room (RevPAR) dropped 22.6% to $76.16, as occupancy fell 14.3% to 56.0%. “With the exception of the Asia Pacific region, Hilton’s first quarter results were not significantly impacted by the COVID-19 pandemic until March 2020, with occupancy roughly flat through February in the Americas and Europe, Middle East and Africa (EMEA) regions,” said Chief Executive Christopher Nassetta. Occupancy in Asia Pacific fell 27.6% to 38.1%.
• JetBlue Airways Corp. JBLU, +6.20% swung to a wider-than-expected loss on revenue that fell more than forecast, as the pandemic led to a significant drop in demand in March. The airline’s load factor fell to 69.8% from 82.5%, as traffic dropped 18.4% and capacity fell 3.5%; capacity in March alone fell 19%. JetBlue said it expects to reduce its daily cash burn to an average of just below $10 million a day in May from an average of $18 million in the second half of March, excluding the CARES Act support of about $5 million a day through the end of the third quarter.
• Kohl’s Corp. KSS, +9.24% opened stores across four states on Monday and will re-open doors to stores across an additional 10 states on May 11. Locations in Arkansas, Oklahoma, South Carolina, and Utah opened on May 4, with Texas, Alabama and Georgia among those to follow. A majority of stores in Florida and Tennessee will also open. Stores will operate from 11 a.m. to 7 p.m. with special shopping hours on Monday, Wednesday and Friday between 11 a.m. and noon for seniors, pregnant shoppers and those with underlying health issues. Limited-contact drive up service for online orders, launched in April, will continue. In addition to wellness checks and other provisions for workers, customers can expect the removal of in-aisle fixtures to create more space for customers and workers, a worker stationed at the door to sanitize carts after each use and limit entry to prevent overcrowding, and shuttered fitting rooms.
• Kontoor Brands Inc. KTB, -6.10%, owner of brands including Wrangler, Lee and Rock & Republic, posted a first-quarter loss and revenue that missed expectations. The company previously withdrew its 2020 guidance. Kontoor ended the quarter with $479 million in cash and equivalents and $1.4 billion in long-term debt. The company drew down its $475 million credit facility, has suspended its dividend, reduced management salaries and taken other financial measures in response to the COVID-19 outbreak. Kontoor says 85% of its business is done through the wholesale channel, with a material decline due to widespread store closures.
• Marriott Vacations Worldwide Corp. VAC, +4.22% provided a first-quarter profit outlook that was well above expectations, but said it was furloughing most of its staff, closing all sales centers through May and suspending its dividend in response to the pandemic. Contract sales were up 10% from a year ago for the quarter to March 13, but are expected to fall 13% for the full quarter. The company expects a net loss of $39 million to $114 million, including an impairment charge of $20 million to $100 million. Excluding nonrecurring items, the company expects an adjusted profit of $2.15 a share, above the FactSet consensus of $1.27. The actions the company is taking to reduce its cash spend in the face of the pandemic include furloughing nearly 65% of its staff, cutting executive salaries by 50%, reducing work weeks by 25%, deferring 401(k) matches and suspending dividend payments and stock repurchases.
• Royal Caribbean Cruises Ltd. RCL, +4.07% will extend its cancellation policy for cruises through April 2022, to give customers “peace of mind in vacation planning” amid concerns over the pandemic. The cruise operator’s “Cruise with Confidence” cancellation policy applies to existing cruise bookings and those made by Aug. 1, 2020. As part of the policy, customers can choose to change the price and promotional offer on their reservation up to 48 hours before the cruise.
• Shopify Inc. SHOP, -1.12% posted a surprise adjusted profit and said that gross merchandise volume accelerated in April from the first quarter. “While the COVID-19 pandemic has subdued commerce globally and especially strained small and medium-size businesses, it has accelerated the shift of purchase habits to e-commerce,” Shopify said. New initiatives include a 90-day free trial for new subscribers to its standard plan as well as curbside pickup and delivery options.
• Spirit Airlines Inc. SAVE, -12.33% reported a wider-than-expected adjusted quarterly loss and sales fell reflecting the virtual halt on air-travel demand amid the pandemic. Spirit said it was on track to meet or beat first-quarter guidance when the cancellations started to pour in mid-March.
• Tesla Inc. TSLA, -0.43% is preparing to resume some car production at its Fremont, Calif., factory within the next week, potentially in violation of local coronavirus rules, the San Francisco Chronicle reported. Citing an anonymous source familiar with factory operations, the Chronicle said a small number of employees returned to the plant Wednesday to start preparations to reopen some production lines between now and next week. Tesla did not immediately respond to a request for comment. California Gov. Gavin Newsom has said some manufacturing plants may soon reopen, but it was unclear if Tesla’s operations would be included. Alameda County authorities declared Tesla’s factory a non-essential business in March, shuttering it along with most other businesses in the San Francisco Bay Area. Tesla Chief Executive Elon Musk has been an outspoken critic of stay-at-home rules to stem the spread of the coronavirus, and Tesla defied the rules for about a week until the county sheriff intervened. The plant, which employs about 10,000 workers, has reportedly been staffed by a small number of “essential workers” since mid-March.
• Ulta Beauty Inc. ULTA, +2.51% will reopen about 180 locations in select states including Tennessee, Texas and Utah on Monday. Some locations will offer hair services, though customers and workers will wear face masks. Health care workers will be eligible for haircuts and styling services at half price for the first month of a store’s reopening. The beauty retailer has introduced curbside pickup at more than 700 stores. Among the other coronavirus-related measures, stores will have signage and limited capacity to aid in social distancing, and there will be no product testers.
• ViacomCBS Inc. VIAC, +13.10% posted stronger-than-expected earnings for the first quarter. The New York-based media and entertainment company’s ad revenue fell 19% from the year-earlier period. Affiliate revenue rose 1%, while domestic streaming and digital revenue rose 51% to $471 million. Content licensing revenue rose 9%, boosted by growth in original studio production for third parties. “Paramount Television Studios, CBS Television Studios and Cable Networks’ studios all benefited from strong content deliveries during the quarter,” the company said in a statement. Theatrical revenue fell 3% and publishing revenue rose 4%. The company raised $2.25 billion by selling bonds in April to bolster its liquidity position during the pandemic and has $3.5 billion in revolving credit capacity. The company has free cash flow of $305 million at the end of the first quarter and operating cash flow of $356 million.
• Vista Outdoor Inc. VSTO, -29.18% reported a first-quarter adjusted profit that beat expectations but revenue that missed and provided a downbeat second-quarter outlook. “Overall, the impact of the COVID-19 pandemic on our operations in the fourth quarter was minimal,” said Chief Executive Chris Metz. “We experienced stronger than expected demand in many of our categories, including commercial ammunition, bicycle helmets and accessories, and outdoor cooking.”
• Zoom Video Communications Inc. ZM, +6.19% acquired Keybase, a secure messaging and file-share company. Zoom Chief Executive Eric Yuan said the acquisition “significantly advances our 90-day plan to enhance our security efforts.” The company didn’t disclose financial terms in the release. Zoom has faced criticism in recent months for its privacy and encryption policies, and the company vowed to be more proactive about security issues on the video-conferencing platform.
New York City Schedules Nightly Subway System Shutdown to Combat Virus
