Bulletin
Investor Alert

July 16, 2020, 6:25 a.m. EDT

Coronavirus update: COVID-19 is far from contained and could rival 1918 flu pandemic that killed 50 million, experts warn

Goldman Sachs posts ‘almost indecent’ earnings that far exceed expectations, while UnitedHealth revenue falls short and Walmart mandates masks

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Moderna Inc. (MRNA)
  • X
    AstraZeneca PLC ADR (AZN)
  • X
    AstraZeneca PLC (AZN)

or Cancel Already have a watchlist? Log In

By Ciara Linnane, MarketWatch

1 2

The U.K. has 45,138 fatalities, the highest in Europe and third highest in the world.

China, where the illness was first reported late last year, has 85,226 cases and 4,642 fatalities.

What’s the latest medical news?

There was positive news from biotech Moderna Inc. /zigman2/quotes/205619834/composite MRNA +2.92% , which said late Tuesday that its coronavirus vaccine candidate produced a “robust” immune-system response in a larger group of people and that the study will move to a decisive clinical trial in July, as MarketWatch’s Claudia Assis reported.

Results published in the New England Journal of Medicine showed that a two-dose vaccination schedule induced the desired immune response in all 45 people evaluated, a larger group than in the preliminary data Moderna released in May, and was generally safe and well-tolerated, the company said.

No serious adverse effects were reported, and some side effects that did occur, such as headaches and fatigue, were “generally transient and mild to moderate in severity,” the company said.

Moderna is evaluating whether the participants’ immune responses are lasting, with participants followed for one year.

A Phase 3 study will start this month “to demonstrate our vaccine’s ability to significantly reduce the risk of COVID-19 disease,” Moderna said. It added that it remained on track “to be able to deliver approximately 500 million doses per year, and possibly up to 1 billion doses per year” beginning in 2021.

The later-stage trial is key, as it will involve the 30,000 patients that are required to really produce evidence of efficacy, analysts said.

“There is no doubt that this vaccine, like its competitors, will face challenges clinically and commercially if the same rates of local and systemic reactions persist, or increase, in their pivotal trial cohort,” Geoffrey C. Porges, analyst at SVB Leerink wrote in a note to clients. ‘If they are offset by very strong disease prevention benefits, then these events are likely to be acceptable, but if not, or if they become more severe, they could significantly limit the vaccine’s adoption in healthy and low risk individuals.”

In other vaccine news, the U.K. broadcaster ITV said positive news may emerge Thursday on initial trials of the Oxford COVID-19 vaccine, which is backed by AstraZeneca PLC /zigman2/quotes/200304487/composite AZN +0.91% /zigman2/quotes/203048482/delayed UK:AZN +1.13% .

The report said “apparently the vaccine is generating the kind of antibody and T-cell (killer cell) response that the researchers would hope to see.”

What’s the economy saying?

Business activity in the Fed’s New York region increased in July for the first time since the pandemic began in March, according to the New York Fed’s Empire State Manufacturing Survey released Wednesday, as MarketWatch’s Greg Robb reported.

The Empire State business-conditions index rose to 17.2 in July from negative 0.2 in the prior month. A reading above zero indicates improving conditions. Economists had expected a reading of 8.9, according to a survey by Econoday.

Forty-one percent of manufacturers reported that conditions were better in early July than in June, up from 36% in the prior survey.

“Recovery continues, but further significant near-term gains are unlikely,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Industrial production rose 5.4% in June, the second gain after a steep drop in March and April, the Federal Reserve reported Wednesday. Wall Street economists had forecast a 4.1% gain, according to a MarketWatch survey. May output was up 1.4%.

This followed a record 12.5% drop in April and a 4.4% decline in March.

Industrial production is still down 10.9% compared with the pre-COVID-19 trend, and production fell at a 42.6% annual rate in the second quarter, the largest quarterly decline since right after the end of the second World War.

“Ongoing issues related to virus-related interruptions as well as weak demand will continue to restrain output going forward,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

What are companies saying?

Bank earnings continued Wednesday, with quarterly numbers from investment bank Goldman Sachs that blew past estimates thanks to a strong performance from trading and fee-based income. Investment-banking revenue rose 36% to a record $2.66 billion, as “significantly higher” underwriting revenue partially offset weakness in corporate lending and financial advisory.

Octavio Marenzi, CEO of the capital-markets management consulting firm Opimas, said the numbers were “almost indecent” and may have political ramifications.

“The Fed has been able to engineer a huge bounce-back in the markets by injecting trillions of dollars, benefiting investment banks primarily,” said Marenzi. “This will lead to calls for the government to do more to help Main Street rather than Wall Street.”

UnitedHealth Group Inc. had a less upbeat quarter, beating profit estimates but falling short on revenue, as premiums and services revenue missed.

“As the [COVID-19] pandemic advanced, access to and demand for care was most constrained from mid-March through April, began to recover in May and approached more typical levels by the end of the second quarter,” the company said in a statement.

Elsewhere, companies continued to offer updates on the state of their business in the new COVID-19 world.

Here’s the latest news on companies and the pandemic:

• Chipotle Mexican Grill Inc. /zigman2/quotes/200781108/composite CMG -0.81%  plans to add a total of 10,000 new hires, with 8,000 positions filled since hiring began in May. During the coronavirus pandemic, Chipotle has seen its digital orders grow 80% on a year-over-year basis, with digital sales becoming an increasingly significant part of the fast-casual chain’s business. New hires will help the company manage business growth. Chipotle also continues to add Chipotlanes, drive-through pickup lanes, to restaurants across the country, with the 100th Chipotlane launching in Ohio.

• Goldman Sachs Group Inc. /zigman2/quotes/209237603/composite GS +0.02%  reported a second-quarter profit that was well above expectations, amid strong revenue growth in its markets and investment-banking businesses. Net income rose to $2.25 billion, or $6.26 a share, from $2.20 billion, or $5.81 a share, in the year-ago period. The FactSet consensus for earnings per share was $3.90. Total revenue grew 41% to $13.30 billion, as noninterest revenue climbed 47% to $12.35 billion to beat the FactSet consensus of $8.77 billion while net interest income fell 12% to $944 million to miss expectations of $1.16 billion. Investment banking revenue rose 36% to a record $2.66 billion, as “significantly higher” underwriting revenue partially offset by weakness in corporate lending and financial advisory. Global markets revenue soared 93% to $7.18 billion, as fixed income, currency and commodities (FICC) revenue more than doubled to $4.24 billion from $1.70 billion and equities revenue increased 46% to $2.94 billion. Goldman maintained its quarterly dividend of $1.25 a share.

• Hanesbrands Inc. /zigman2/quotes/200637580/composite HBI -0.82% was upgraded to strong buy from market perform at Raymond James based on its distribution at major retailers and the potential market share gains from Victoria’s Secret store closures. Raymond James has a $20 price target on Hanesbrands. Analysts list a number of company advantages, including its strong brands, which include Hanes and Playtex, and the scale of the business, benefits during the pandemic. Hanesbrands also rings up 25% of its sales at Walmart Inc. and Target Corp. “[B]oth are trading near all-time-high valuation levels, which indicates that the market believes they are retail winners and that likely implies their largest vendor partners should also be winners,” Raymond James said.

• PVH Corp. /zigman2/quotes/208313660/composite PVH -2.88% , the parent company of Calvin Klein, Tommy Hilfiger and Heritage Brands, plans to streamline its North American operations because of the pandemic. Those plans include exiting 162 outlet stores for Heritage Brands Retail and shaving its North American office workforce by 450 jobs, or 12%. The reductions are across all three brand businesses and corporate functions, which should result in annual cost savings of about $80 million. The Heritage Brands Retail stores are expected to operate through mid-2021.

• UnitedHealth Group Inc. /zigman2/quotes/210453738/composite UNH +1.00%  reported a second-quarter profit that rose well above expectations, but revenue that came up short, as premiums and services revenue missed. Premiums revenue rose 4.7% to $49.39 billion to miss the FactSet consensus of $50.05 billion; products revenue fell 1.3% to $8.25 billion, but topped expectations of $8.08 billion; and services revenue dropped 7.6% to $4.16 billion, missing expectations of $4.99 billion. The company affirmed its 2020 adjusted EPS guidance range of $16.25 to $16.55. “As the [COVID-19] pandemic advanced, access to and demand for care was most constrained from mid-March through April, began to recover in May and approached more typical levels by the end of the second quarter,” the company said in a statement.

/zigman2/quotes/205619834/composite
US : U.S.: Nasdaq
$ 69.87
+1.98 +2.92%
Volume: 13.21M
Sept. 18, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$27.57 billion
Rev. per Employee
$177,721
loading...
/zigman2/quotes/200304487/composite
US : U.S.: NYSE
$ 56.45
+0.51 +0.91%
Volume: 2.93M
Sept. 18, 2020 4:00p
P/E Ratio
68.84
Dividend Yield
2.43%
Market Cap
$148.75 billion
Rev. per Employee
$342,432
loading...
/zigman2/quotes/203048482/delayed
UK : U.K.: London
8,746.00 p
+98.00 +1.13%
Volume: 3.26M
Sept. 18, 2020 4:35p
P/E Ratio
67.32
Dividend Yield
2.47%
Market Cap
£114.77 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/200781108/composite
US : U.S.: NYSE
$ 1,215.48
-9.89 -0.81%
Volume: 783,354
Sept. 18, 2020 4:03p
P/E Ratio
134.89
Dividend Yield
N/A
Market Cap
$33.99 billion
Rev. per Employee
$66,644
loading...
/zigman2/quotes/209237603/composite
US : U.S.: NYSE
$ 194.86
+0.03 +0.02%
Volume: 9.07M
Sept. 18, 2020 4:00p
P/E Ratio
14.82
Dividend Yield
2.57%
Market Cap
$67.05 billion
Rev. per Employee
$1.34M
loading...
/zigman2/quotes/200637580/composite
US : U.S.: NYSE
$ 15.67
-0.13 -0.82%
Volume: 14.12M
Sept. 18, 2020 4:00p
P/E Ratio
10.75
Dividend Yield
3.83%
Market Cap
$5.46 billion
Rev. per Employee
$100,058
loading...
/zigman2/quotes/208313660/composite
US : U.S.: NYSE
$ 68.48
-2.03 -2.88%
Volume: 2.61M
Sept. 18, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$4.87 billion
Rev. per Employee
$264,978
loading...
/zigman2/quotes/210453738/composite
US : U.S.: NYSE
$ 308.02
+3.04 +1.00%
Volume: 3.80M
Sept. 18, 2020 4:00p
P/E Ratio
17.32
Dividend Yield
1.62%
Market Cap
$292.72 billion
Rev. per Employee
$754,157
loading...

Ciara Linnane is MarketWatch's investing- and corporate-news editor. She is based in New York.

1 2
This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.