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4:18 pm: Sell-off by the numbers

  • The Dow fell 391 points, or 1.59%, breaking a 3-day win streak
  • Home Depot had the most negative impact on the Dow, accounting for 50 points against the index
  • The S&P 500 fell 31 points, or 1.05%, breaking a 3-day win streak   
  • The Nasdaq Composite fell 50 points, or 0.54%, breaking a 3-day win streak. At one point during the session the tech-heavy index hit its highest level since Feb. 25 
  • The Russell 2000 fell 1.95%, breaking a 3-day win streak
  • All 11 S&P Sectors were negative, led to the downside by Energy, which fell 2.89%. Consumer Discretionary was the best performer, sliding 0.09%        

4:07 pm: Fed’s Rosengren warns of opening economy too soon

Boston Fed President Eric Rosengren, whose district covers one of the coronavirus national hotspots, warned Tuesday that opening businesses too soon could be a mistake. Even if places like restaurants and retail stores open, people may not yet feel safe enough to go there, the central bank official told CNBC’s “Closing Bell.” “It’s really important to get the public health right. If we don’t get the public health right, it’s going to be impossible for us to get the economy right,” he said. Boston has begun the first phases of its reopening as the state has been plagued by a high coronavirus fatality count, which most recently was near 5,800. – Cox

4:01 pm: Stocks close at session lows, Dow drops nearly 400 points

Stocks finished the session around the lowest levels of the day, as weakness in the retail and financial sectors weighed on markets. The Dow dropped 390 points, or 1.59%. The S&P 500 slid 1.05%, while the Nasdaq fell 0.54%. Tuesday’s move lower was in sharp contrast to Monday’s rally, which saw stocks post their best day since early April – Stevens 

3:18 pm: Stocks fall to session lows on reported doubts over Moderna drug, before recovering losses

Stocks dropped do their lowest levels of the day following a report from Stat News that the Moderna vaccine for Covid-19 might not be as effective as some think. The report, which cited several vaccine experts, said that based on information that Moderna has released there’s no way to determine the efficacy of the drug. The Dow briefly traded more than 200 points lower before paring losses. Moderna was about 9% lower after earlier falling more than 12%. The market’s rally has in some part been tied to the latest developments surrounding a coronavirus vaccine. Stocks jumped on Monday due to hopes from the Moderna trial. – Stevens

3:01 pm: Stocks drop to session lows

Stocks fell to their lowest levels of the day with roughly one hour of trading left. The Dow shed 224 points, dragged lower by Home Depot and Walmart. The S&P 500 slipped 0.4%. The Nasdaq stayed in the green with a gain of 0.27%, although earlier in the session it had gained 0.89%. – Stevens

2:57 pm: Royal Caribbean needs to raise an additional $2.5B-$3B to survive a ‘no sail’ scenario through 2021, analyst says

Ahead of Royal Caribbean’s first quarter earnings results, Wells Fargo said it believes the company will have to raise significant capital. “We expect the raise will likely occur over the next 2-3 weeks and lean toward convertible debt and equity,” the firm said in a note to clients. Wells Fargo expects “limited incremental information” from Royal Caribbean’s results on Thursday as the company already preliminary reported back May 13. “We will be looking for potential fleet reactivation plans/timeline, update on customer deposit balance and refund/cancellation rates post March 31, details on booking/pricing trends over the past week including rebookings vs. new bookings for 2021, remaining unencumbered assets, incremental cost or cash burn reduction opportunities.” Shares have gained 16% this week, but are down 67% this year. – Bloom

2:27 pm: Bank of America says market’s rally can continue

Bank of America technical research strategist Stephen Suttemeier pointed out in a note to clients that the S&P 500’s rally puts it within striking distance of its declining 200-day moving average. “In theory, a rally toward a declining 200-day MA is bear market rally, but investor sentiment is bearish, along with record cash levels, as investors fight the Fed. This is contrarian bullish and suggests that the rally can continue,” Suttemeier said. He added that on Monday the market had its third “90% up day” since March, meaning that 90% of NYSE-listed stocks rose on upside volume. Such days “confirm lows & signal a bottoming process.” — ImbertBloom

2:19 pm: Internet-focused ETF jumps to new all-time high

The First Trust Dow Jones Internet Index Fund (FDN) hit a new all-time high during Tuesday’s trading session. The gains were fueled by names like Smartsheet and DocuSign, which each rose 5%, as well as Facebook, Pinterest and Groupon, all of which gained more than 3%. For the year, the ETF has returned more than 13%. – Francolla, Stevens

2:14 pm: Citi sees 7% upside for stocks over next 12 months

Citigroup’s Tobias Levkovich initiated a 12-month price target of 3,160 for the S&P 500. That represents a 7% upside from Monday’s close of 2,953.91. “While some industries could face permanent long-term damage, the Great Pause will reverse itself as time progresses,” Levkovich, the bank’s chief U.S. equity strategist, said in a note to clients. —Imbert

2:10 pm: Watch out for the ‘chart battle,’ UBS Art Cashin says

Longtime trader Art Cashin advised market participants to be mindful of the market’s technicals following Monday’s monster gains. “Watch the chart battle,” Cashin, director of floor operations for UBS, said in a note. “Traders saw stock resistance at S&P 2950 to 2975 and Dow 24250 to 24600. The Dow reached 24700, while the S&P stalled at 2968. More range testing apparently is in order. Bulls need to blowout on the upside or suffer perhaps a chart failure.” — Imbert, Domm

12:00 pm: Markets at midday: Stocks mostly flat after Monday’s massive rally

Around midday, the major averages were mostly flat as investors digested the massive gains from the previous session along with testimony from Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell. The Dow was down just 22 points, or 0.1%, while the S&P 500 traded 0.1% higher. The Nasdaq outperformed with a 0.7% gain. —Imbert

11:55 am: UBS: Outperformance in high-beta stocks signals more optimism about the economy

UBS strategist Francois Trahan highlighted the recent outperformance in high-beta stocks — those with an amplified positive correlation to the overall market —and sees it as a positive sign. “Investors are feeling more optimistic about their expectations for economic growth ahead,” Trahan wrote in a note to clients. The Invesco S&P 500 High Beta ETF (SPHB) has rallied more than 22% this quarter. —Imbert, Bloom

11:50 am: Warren presses Mnuchin about mandating companies to keep workers on payrolls

Sen. Elizabeth Warren pressed Treasury Secretary Steven Mnuchin on Tuesday about whether companies that accept the CARES Act loans from the government will be forced to keep workers on payrolls, which the legislature does not mandate. The Massachusetts senator said the coronavirus pandemic has caused 35 million Americans to file unemployment, while Mnuchin is “boosting” his “Wall Street buddies.” Mnuchin called Warren’s characterization “unfair.” “These issues were discussed with both Republicans and Democrats at the time. You were not necessarily part of those discussions but these were completely discussed,” said Mnuchin. — Fitzgerald 

11:39 am: Mnuchin on new 20-year bonds: ‘Lock in’ interest rates at historic lows

Treasury Secretary Steven Mnuchin said with the launch of a new 20-year bond, the department is aiming to stretch the duration while locking in ultra-low interest rates. “Prior to this, we spent a lot of time looking at 50- and 100-year bonds and determined that there just wasn’t enough demand to make it worth it given our borrowing sizes,” Mnuchin said Tuesday during a Senate hearing. A 20-year bond “gives us the ability to extend the duration to raise significant amount of funds. It is my intention to borrow a lot of money in the short term to have the funding, but then to expand our financing in 10-, 20- and 30- year bonds. What I’d like to do is to lock in a significant amount of very low interest rates so that the money we are borrowing can be paid back and dealt with over a long period of time.” The Treasury Department is launching a 20-year bond later this month in a $20 billion auction to fund a record level of borrowing the government will need to do this year to support the economy through the coronavirus pandemic. –Li

11:15 am: Monday’s rally allowed more than 80% of S&P 500 stocks to close above their 50-day moving average

More than 80% of the stocks in the S&P 500 closed at a price above their 50-day moving average on Monday, according to Bespoke Investment Group. That is the highest reading since January 17, the firm said in a tweet on Tuesday. Health Care had the most stocks — 98.33%— closing above their 50-day moving average. Technology and Energy were the next best sectors. — Fitzgerald 

11:10: Shares of Netflix jump to all-time high level

Netflix shares hit a new all-time high on Tuesday, as the company continues to benefit from people staying home amid the coronavirus pandemic. The stock rose to an all-time intraday high of $458.97, bringing the year-to-date gain to just over 40%. The other so-called “FAANG” stocks were also trading higher, with Amazon leading the pack with a gain of 1.6%. – Stevens

11:00 am: Here are Tuesday’s biggest analyst calls of the day: Disney, Peloton, Beyond Meat & more

  • Loop downgraded Disney to hold from buy.
  • BTIG initiated Beyond Meat as buy.
  • SunTrust raised its price target on Peloton to $60 from $52.
  • Seaport initiated Lockheed Martin and Northrop Grumman as buy
  • Evercore ISI initiating MSG Sports as outperform.
  • Guggenheim downgraded Comcast to neutral from buy.
  • Bernstein upgraded Hain Celestial to outperform from market perform.
  • Jefferies downgraded Expedia to hold from buy.

Pro Subscribers can read more here. —Bloom

10:45 am: Mnuchin: ‘We are fully prepared to take losses’

Treasury Secretary Steven Mnuchin said Tuesday the Treasury and the Federal Reserve are “fully prepared to take losses” on the remaining capital from the coronavirus bailouts. Mnuchin said before the Senate Banking Committee he is prepared to distribute the entire $500 billion appropriated to help struggling businesses impacted by the coronavirus pandemic. — Fitzgerald, Wilkie 

10:08 am: Congressional testimonies begin

Federal Reserve chairman Jerome Powell and Treasury Secretary Steven Mnuchin’s testimonies to the Senate Banking, Housing and Urban Affairs Committee have started. The remarks will become a quarterly event surrounding the CARES Act, the $2 trillion federal stimulus package. Watch the live broadcast here. — Fitzgerald 

9:47 am: Stay-at-home trade reappears, Dow slips in early trading

Stay-at-home stocks resumed their outperformance in the opening minutes of trading on Tuesday, with Amazon, Netflix and Facebook helping the Nasdaq gain 0.3%. Walmart also rose about 2% following its quarterly earnings report.

The Dow meanwhile fell more than 100 points in the opening minutes of trading on Tuesday following Monday’s 900-point rally. Declining stocks outnumbered gainers 24 to 6 on the 30-stock index. The KBW Bank Index was also down 2.3% after bank stocks surged on Monday. —Pound

9:30 am: Stocks open little changed ahead of Congressional testimonies

Major stock indexes opened nearly flat on Tuesday as investors awaited testimony from Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin. The Dow was 90 points, or 0.4%, lower in early trading, while the Nasdaq rose by less than 0.1% and the S&P 500 fell 0.25%. —Pound

9:09 am: Housing starts post worst monthly decline on record 

Housing starts tumbled 30.17% to a seasonally adjusted annual rate of 891,000 units last month, a five year low, the Commerce Department said on Tuesday. The drop was also the biggest monthly decline on record since the government started tracking the data in 1959. Meanwhile, building permits fell 20.8% in April for their worst month since July 2008 when permits fell 21.95%. The decline in home construction starts underscored the coronavirus’ impact on the U.S. housing market and broader economy. –Li, Francolla

8:58 am: Southwest says it’s seeing some demand improvement

Shares of Southwest Airlines jumped more than 4% during premarket trading after the company said in a filing that it’s seeing a modest improvement in bookings for June. The airline is expecting capacity to decrease between 45% and 55% for June, with operating revenue down 80% to 85%. For May, Southwest now forecasts an 85% to 90% decline in revenue, versus prior estimates of a 90% to 95% decline. “The Company’s month-to-date net positive bookings represent a reversal in the net negative booking trends experienced during the majority of March and April 2020, where trip cancellations outpaced new passenger bookings,” the filing said. Shares of the airline have slid 50% this year. —Stevens

8:56 am:  Fed chiefs at May testimonies have a history – remember the ‘taper tantrum’ 

Market pros are watching every nuance in the testimony of Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin before the Senate Banking Committee. They are set to discuss the policy response to the coronavirus emergency.  BMO rate strategist Jon Hill reminds us that former Fed Chairman Ben Bernanke was appearing before the Congressional Joint Economic Committee on May 22, 2013, when he started the ‘taper tantrum’  market sell-off.  In response to a question, Bernanke said: “If we see continued improvement and we have confidence that that’s going to be sustained then we could in the next few meetings…take a step down in our pace of purchases.” Hill doesn’t expect the same from Powell. “I don’t expect anything like that to come out, but it’s theoretically a live possibility. These are big names -Powell and Mnuchin.  They do have the opportunity to move markets,” he said. The 10-year yield was at 0.73% ahead of the testimony, and the next level to watch is 0.75%, the intraday technical peak going back to April 15. —Domm

8:42 am: SunTrust hikes Peloton target to Street high

SunTrust Robinson Humphrey analyst Youssef Squali raised his price target on Peloton to $60 per share from $52. Squali said in a note to clients that guidance from the company on its fitness subscriptions are too conservative and that it would be growing even faster if it could deliver its physical products more quickly. The price target is more than 37% above where trading closed on Monday and is the highest among major analysts on Wall Street, according to FactSet. Shares rose 3.5% in premarket trading. —Pound

8:23 am: Single stocks see record outflows last week, says Bank of America 

Last week, when the S&P 500 experienced its worst week in two months and dropped 2.3%, clients at Bank of America sold $4.8 billion in U.S. equities, the firm said. The selling was driven by the largest outflows from single stocks in the firm’s data history since 2008. “All three client groups (hedge funds, institutional and private clients) sold equities at near-record levels. Institutional clients were the biggest sellers, while hedge funds have the longest selling streak (five weeks),” said Bank of America Securities equity and quant strategist Jill Carey Hall. —Fitzgerald

8:21 am: Moderna falls after new stock offering

Shares of Moderna were down 6% in premarket trading after the biotecth company announced that it was raising $1.3 billion with a secondary stock offering. The offering, which is being run by Morgan Stanley, was priced at $76 per share, 5% below where shares closed on Monday. The stock spiked nearly 20% on Monday following news that Moderna’s coronavirus vaccine candidate was showing positive results in early trials. —Pound

8:10 am: Kohl’s net sales drop by more than 40%

Shares of Kohl’s rose 1% in premarket trading, bouncing back from earlier losses, after reporting results for its fiscal first quarter. The company reported an adjusted loss of $3.20 cents per share and $2.16 billion in revenue, both missing Wall Street estimates, as net sales dropped by more than 40%. The retailer said it ended the quarter with $2 billion in cash and another $500 million in a credit revolver. The stock rallied 7.3% on Monday. —Pound

8:08 am: Oil prices rise ahead of contract expiration

The West Texas Intermediate contract for June delivery jumped on the contract’s final day of trading, gaining 91 cents, or 2.86%, to trade at $32.73 per barrel. Tuesday’s move builds on recent strength, which has seen oil post three straight weeks of gains. On Monday WTI surged 8.12% to settle at $31.82, the highest level in more than two months. Steep production cuts as well as an increase in demand as states reopen economies are fueling the rally, although prices are still well below the more than $60 oil fetched at the beginning of the year. International benchmark Brent crude traded 20 cents higher at $35.01 on Tuesday, while the WTI contract for July deliver rose 24 cents to $31.87. –Stevens

7:58 am: Mnuchin, Powell to face Senate over emergency lending programs 

The U.S. Treasury Secretary and the Chairman of the Federal Reserve will appear via video-conference before the Senate Banking Committee on Tuesday at 10 a.m. ET to answer questions on how they are appropriating $500 billion in crisis lending programs. Congress earlier this year made those funds available through its $2 trillion economic relief package known as the CARES Act. The Treasury received $46 billion to direct assistance to airlines and other bruised industries with another $450 billion earmarked to cover losses in the Fed’s lending program. Senators will likely grill Treasury Secretary Steven Mnuchin on how much risk the department is willing to accept on its investment in the Fed’s lending apparatus and the implications of losing a significant portion of those funds allocated by Congress. Fed chief Jerome Powell, meanwhile, could face questions about when the Fed’s lending facilities will be functional and whether lawmakers need to provide additional funding to mitigate the fallout from the current economic downturn. In prepared remarks that Powell will deliver to lawmakers, Powell says the Fed is “committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response.” — Franck

7:50 am: Walmart climbs after reporting rapid rise for e-commerce

Shares of Walmart gained 3.8% in premarket trading after the retailer reported its first-quarter earnings, showing increases in same-store sales and e-commerce. The company’s online orders in the U.S. rose 74% compared with the same quarter last year. Walmart reported $1.18 in adjusted earnings per share on $134.6 billion in revenue. Analysts expected $1.12 in earnings per share on $132.8 billion in revenue, according to Refinitiv. —Pound

7:46 am: Home Depot misses profit expectations in the first quarter

Shares of Home Depot fell about 2% during Tuesday’s premarket trading after the company missed earnings expectations in the first quarter thanks to higher coronavirus-related costs. For the quarter the company earned $2.08 per share, which was below the $2.27 analysts had been expecting. Same-store sales jumped 6.4%, beating consensus estimates of a 4.4% rise. Revenue came in at $28.26 billion, which was also higher than the expected $27.54 billion. The company said that coronavirus-related expenses – such as increasing paid time off for hourly employees – totaled $640 million, or 60 cents per share. —Stevens

7:45 am: Jamie Dimon: Coronavirus is a ‘wake-up call’ for more inclusive economy 

JPMorgan Chase CEO Jamie Dimon said in a memo that the economic crisis sparked by the coronavirus should be used to make for a more inclusive economy. “It is my fervent hope that we use this crisis as a catalyst to rebuild an economy that creates and sustains opportunity for dramatically more people, especially those who have been left behind for too long,” Dimon said. “The last few months have laid bare the reality that, even before the pandemic hit, far too many people were living on the edge.” Dimon’s memo comes ahead of the bank’s annual shareholder’s meeting. —ImbertSon

7:25 am: Stock futures flat after 900-point Dow rally in previous session

U.S. stock futures pointed to a pause on Tuesday following sharp gains during Monday’s session. Dow Jones Industrial Average futures traded just 11 points higher, or 0.04%. Dow futures were initially dragged down by a 2.1% drop in Home Depot shares during premarket trading. However, those losses were offset by a 4% gain in Walmart shares. S&P 500 futures dipped 0.1% while Nasdaq 100 futures gained 0.2%. On Monday, the Dow and S&P 500 logged in their best day since early April, with the Dow rallying more than 900 points. The S&P 500 gained 3.2%. —Imbert

—With reporting from Hugh Son, Tom Franck, Maggie Fitzgerald, Patti Domm, Yun Li, Michael Bloom and Gina Francolla. 

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