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US stocks mixed; Walmart sales surge

By SCOTT REEVES in New York | chinadaily.com.cn | Updated: 2020-05-20 00:05

US stocks were mixed in early trading Tuesday following the market's best day in about six weeks on news of a potential vaccine for the coronavirus.

Economic news was disparate, sending the Dow lower – despite Walmart's blowout earnings.

On Monday, Moderna, a drug maker in Cambridge, Massachusetts, reported encouraging results in the first round of human testing of its coronavirus vaccine.

In early trading Tuesday, Moderna's stock fell 3.46 percent.

"Investors are just pausing for a breather after yesterday's excitement about the potential development of a vaccine," Hugh Gimber, strategist for J.P. Morgan Asset Management, told The Wall Street Journal.

Walmart, the nation's largest brick-and-mortar retailer, showed strength during the pandemic.

The compay's stores remained open as an essential retailer. Sales surged in the early weeks of the outbreak as customers bought unusually large quantities of food, hand sanitizer and other household essentials.

Walmart said US e-commerce sales jumped by 74 percent while same-store sales, or sales at stores open more than one year, increased by 10 percent.

Walmart said first quarter net income rose to $3.99 billion on sales of $134.62 billion compared with earnings of $3.84 billion on revenue of $123.9 billion a year ago.

The company said it has hired an additional 235,000 employees to clean stores, stock shelves and fulfill online orders during the pandemic. The company said it had paid cash bonuses totaling about $755 million to all hourly workers in the US.

But Walmart withdrew its financial guidance for the year.

"The decision to withdraw guidance reflects significant uncertainty around several key external variables and their potential impact on our business and the global economy, including: the duration and intensity of the COVID-19

health crisis globally, the length and impact of stay-at-home orders, the scale and duration of economic stimulus employment trends and consumer confidence," Brett Biggs, Walmart's chief financial officer, said in a statement.

Walmart's shares gained 1.4 percent in early trading Tuesday.

But other retailers have been hit hard during the pandemic.

Pier 1 Imports, a home goods retailer, said Tuesday it has been unable to find a buyer and plans to sell its inventory, remaining assets and online operations.

"This decision follows months of working to identify a buyer who would continue to operate our business going forward," CFO Robert Riesbeck said in a statement.

"Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down."

The company's stock traded over the counter.

Luxury retailer Neiman Marcus and department store chain J.C. Penney previously announced plans to seek bankruptcy protection to reorganize their debts. Upscale retailer Nordstrom has announced store closures.

Shopping malls are opening around the country, but foot traffic is reportedly light. Consumer spending represents about two-thirds of the US economy.

In early trading Tuesday, the Dow Jones Industrial Average fell 129.53 points, or 0.53 percent, to 24,461.98. The S&P 500 dipped 0.10 percent. The Nasdaq Composite edged up 0.45 percent.

On Monday, the Dow advanced 911.95 points, or 3.85 percent, to 24,597.37. The S&P 500 gained 3.15 percent. The Nasdaq Composite gained 2.44 percent.

On Tuesday, the price of West Texas Intermediate crude, the guide for US prices, rose 4.02 percent to $33.10 a barrel. Brent crude, the worldwide benchmark, added 0.57 percent to $35.01 a barrel.

The price of oil is a proxy for future economic activity. Earlier in the pandemic, the price of West Texas crude turned negative as supply exceeded demand and storage reached capacity. Rising oil prices show increased demand confidence in an economic rebound.

More people are traveling as lockdown restrictions are eased and factories, including automakers, are opening, boosting the demand for fuel.

Oil stocks were mixed in early trading.

Exxon Mobil declined 1.57 percent, Chevron ticked down 0.78 percent but Sunoco rose 1.64 percent.

Southwest Airlines said Tuesday bookings exceeded cancelations this month – a first since the coronavirus pandemic began. Air travel collapsed during the outbreak, forcing carriers to cancel flights, furlough workers and ground planes.

In early trading, Southwest's stock gained 1.07 percent.

Delta Air Lines said it will limit first class seating to 50 percent and cabin seating to 60 percent of capacity at least through June 30.

This should ease concerns of passengers, but it will increase cost unless passengers are willing to pay a premium to ensure social distancing. The airline said it would add flights if needed.

In early trading, Delta's stock lost 0.58 percent.

Nasdaq soon will announce new restrictions on IPOs that could limit some Chinese companies from listing on the exchange, CNBC reported.

Luckin Coffee debuted last year, and it was later revealed that company officials had fabricated sales figures. The new guidelines are intended to ensure more rigorous accounting and make accurate financial records available.

The South China Morning Post cited a source familiar with the situation as saying that China will list new companies on the London Stock Exchange and move away from US markets.

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