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July 25, 2020, 7:37 p.m. EDT

Coronavirus update: U.S. counts more than 1,000 fatalities for a fourth straight day as virus spread accelerates in South and West

‘What we have now are essentially three New Yorks, with these three major states,’ says Dr. Deborah Birx

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By Ciara Linnane, MarketWatch

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A separate report found the service sector lagging behind manufacturing, as some areas of the country have reimposed lockdown measures.

IHS Markit said its U.S. flash manufacturing purchasing managers index rose to 51.3 in July from 49.8 in the previous month. The flash services purchasing managers index rose only to 49.6 from 47.9 in June.

Any reading above 50.0 indicates improving conditions, while readings below that measure indicate contraction. The flash estimate is typically based on approximately 85%–90% of total survey responses each month.

See: Baseball is back — here’s how U.S. sports leagues are returning during the pandemic

The U.S. economy is experiencing the first-ever recession driven by the services sector. And economists are concerned because some key service sectors like travel, restaurants, and entertainment are not expected to recover soon given the pandemic. Manufacturing is slowly getting on its feet but is still experiencing headwinds.

“The lack of growth is a disappointment,” said Chris Williamson, chief business economist at IHS Markit.

What are companies saying?

Three Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.83%  components reported earnings, starting late Thursday with chip giant Intel Corp., which disappointed with news of a delay in its next generation of semiconductor technology, MarketWatch’s Jon Swartz reported. Intel said it may actually use a third party to manufacture it as a contingency plan.

Intel /zigman2/quotes/203649727/composite INTC +1.95% stock was slammed after it reported along with second-quarter earnings that the introduction of its 7-nanometer chips would be delayed by at least six months. AMD /zigman2/quotes/208144392/composite AMD +1.87% is already selling 7-nm semiconductors for servers and PCs; in chip parlance, nanometers, or nm, is the size of the transistors that go on a computer chip, with the general rule being that smaller transistors are faster and more efficient in using power.

“We have identified a defect mode in our 7-nanometer process that resulted in yield degradation,” said Bob Swan, Intel’s chief executive, on a conference call late Thursday. “We’ve root-caused the issue and believe there are no fundamental roadblocks, but we have also invested in contingency plans to hedge against further schedule uncertainty.”

See now: Intel admits another defeat with unprecedented manufacturing issues

There was better news from American Express Co. /zigman2/quotes/203805826/composite AXP +1.56% , which posted a surprise profit for the second quarter, but revenue that lagged estimates amid a fall in card member spending during the pandemic.

Verizon Communications /zigman2/quotes/204980236/composite VZ -0.31% beat on profit and revenue but its report showed negative impacts from the pandemic. The wireless operator estimates that both GAAP and adjusted EPS saw negative impacts of about 14 cents stemming from impacts to wireless service revenue and lower advertising and search revenue for Verizon’s media unit.

Elsewhere, there was a setback for Moderna Inc. /zigman2/quotes/205619834/composite MRNA -3.01% , one of the many companies working on a COVID-19 vaccine candidate. The U.S. Patent and Trademark Office ruled in favor of Arbutus Biopharma Corp. /zigman2/quotes/203237619/composite ABUS +1.78% in a patent dispute between the companies, MarketWatch’s Jaimy Lee reported.

The decision may mean that Arbutus will attempt to make a royalty claim to products developed by Moderna’s lipid nanoparticle delivery technology, which is currently being used to develop a COVID-19 vaccine.

SVB Leerink’s Mani Foroohar said the ruling is a “disappointing turn” for Moderna, and “any meaningful royalty burden could hamper MRNA’s pricing flexibility and margin profile vs. other players in the SARS-CoV-2 vaccine market.”

Click to Play

What It Would Take to Reach Herd Immunity for the Coronavirus

Scientists are working at breakneck speed to develop an effective vaccine for the coronavirus. Their ultimate goal: to immunize enough of the world’s population to reach herd immunity. WSJ explains. Illustration: Jacob Reynolds

Here’s the latest news on companies and COVID-19:

• Fans of the iPhone will probably have to wait at least another month before shiny new models are unveiled. Apple Inc. /zigman2/quotes/202934861/composite AAPL -0.56% is delaying its annual fall event until the latter half of October instead of early September, according to a tech blog. The company was forced to push back the event for the 5G-compatible iPhone 12 line because of production delays caused by the pandemic, the Japanese Apple blog Mac Otakara reported. Apple is expected to announce four new iPhones, with the 5G models available in November.

• Boston Beer Co. /zigman2/quotes/205338227/composite SAM +0.27% , maker of Sam Adams and other alcoholic beverages, reported an unexpected doubling of profit from the year before amid the pandemic. Chief Executive Dave Burwick credited “increases in our Truly Hard Seltzer and Twisted Tea brands and the addition of the Dogfish Head brands” for some of the demand gains. Boston Beer now expects full-year earnings of $11.70 to $12.70 a share, while analysts on average had forecast 2020 earnings of $9.84 a share.

• eHealth Inc. /zigman2/quotes/202600750/composite EHTH +1.14% , an online health insurance marketplace, reported an adjusted quarterly profit and sales that came in above expectations. Revenue rose 35% to $88.8 million. The company said the number of new paying members for all its Medicare products rose 40% to 72,651 people. •

• ETrade Financial Corp. reported fiscal second-quarter results that slightly exceeded Wall Street estimates. The company also declared a quarterly cash dividend of 14 cents a share.

• Honeywell International Inc. /zigman2/quotes/205583690/composite HON +2.14%  reported second-quarter profit and sales that fell, but beat expectations. The company said it expects sales challenges resulting from the pandemic will continue, particularly in the aerospace and oil and gas businesses. Aerospace sales declined 28% to $2.54 billion, but topped the FactSet consensus of $2.41 billion; performance materials and technologies sales declined 19% to $2.22 billion but topped expectations of $2.19 billion; safety and productivity sales slipped 1% to $1.54 billion to beat expectations of $1.43 billion; and building technologies sales shed 19% to $1.18 billion, missing expectations of $1.24 billion.

• Toy maker Mattel Inc. /zigman2/quotes/209819189/composite MAT -0.64% reported a narrower-than-expected second-quarter loss and sales that were higher than Wall Street expected, thanks to sales in North America and total sales of Barbie and other dolls and games. Online sales “continued to grow strongly in all regions.” Gross sales in North America increased 3%, primarily on sales of Barbies as well as action figures, building sets, and games, the company said. Sales of its toy vehicles, including Hot Wheels, fell, the company said. Mattel said its supply chain continued to perform well despite temporary closures connected to the coronavirus pandemic. “Currently all of our factories are open with minimal disruption to operations, as we enter the peak production season,” it said. Liquidity is expected to be enough “to effectively manage through the COVID-19 disruption and to continue to execute our strategy,” the company said.

• McDonald’s Corp. /zigman2/quotes/203508018/composite MCD -0.36% will require customers to wear a face covering in all of its restaurants starting August 1. About 82% of McDonald’s restaurants are in places where face covering mandates are already in place.

• Paramount Pictures will delay the release of two of its most anticipated movies, “Top Gun: Maverick,” and “A Quiet Place Part II,” to 2021 due to the pandemic. The “Quiet Place” sequel is now scheduled for April 23, 2021, and the “Top Gun” sequel is on tap for July 2, 2021. Paramount is a unit of ViacomCBS Inc. /zigman2/quotes/200340870/composite VIAC +1.00%

• ScanSource Inc. /zigman2/quotes/201747816/composite SCSC +4.64% , a provider of barcode, networking, security and business communications services, provided an upbeat sales outlook, while also saying it will cut jobs as part of a expense-reduction plan. The company expects fiscal fourth-quarter net sales of $758 million, compared with the FactSet consensus for total revenue of $718 million. ScanSource announced a $30 million cost cutting plan, which will include a reduction of its North America workforce, salary reductions of 10% to 25% for its executive team, elimination of cash retainers for the board of directors for the rest of the year and cutting discretionary spending. The company is closing its Canpango professional services business, which it acquired in August 2018, which is expected to result in a $2 million charge.

• Schlumberger Ltd. /zigman2/quotes/201012972/composite SLB +6.25% swung to a multibillion-dollar loss in the second quarter and revenue fell short of estimates, as the twin effects of the pandemic and falling oil price weighed. “This has probably been the most challenging quarter in past decades,” Chief Executive Olivier Le Peuch said, as he announced 21,000 job cuts. Revenue fell 28% from the first quarter, “caused by the unprecedented fall in North America activity, and international activity drop due to downward revisions to customer budgets accentuated by COVID-19 disruptions. This speaks volumes about an industry confronted with historic oil demand and supply imbalances caused by demand destruction from the global COVID-19 containment effort.” The company is reorganizing and combining its 17 product lines into four divisions, restructuring geographically around five key basins of activity and streamlining management, he said. Schlumberger expects to remove $1.5 billion of costs permanently. “Looking at the macro view in the near-term, oil demand is slowly starting to normalize and is expected to improve as government measures support consumption,” said the CEO. “However, subsequent waves of potential COVID-19 resurgence pose a negative risk to this outlook.”

• Skechers USA Inc. /zigman2/quotes/201784799/composite SKX +7.25% reported a narrower-than-expected adjusted second-quarter loss and sales that were above expectations. “Skechers, like most businesses around the world, has never faced a more challenging time than during the pandemic, which caused the closing of nearly every market worldwide,” Chief Executive Robert Greenberg said. The company ended the quarter with cash and cash equivalents around $1.6 billion, thanks in part to drawing down $490 million from its credit facility in the first quarter. The company did not provide an outlook.

• Office supply equipment retailer Staples will require face coverings in all its stores starting Monday. Staples is an essential retailer, selling hand sanitizer and other personal protective equipment (PPE) as well as equipment for working and schooling from home. Staples joins retailers like Walmart Inc. /zigman2/quotes/207374728/composite WMT -0.26% and Target Corp. /zigman2/quotes/207799045/composite TGT +0.06% that will require customers to wear face coverings in stores.

See also: Christopher Nolan blockbuster ‘Tenet’ now delayed indefinitely due to coronavirus

• Tailored Brands, Inc. has received a notice of noncompliance from the New York Stock Exchange. The retailer behind Men’s Wearhouse, Jos. A. Bank and other brands selling suits and other apparel is out of compliance with the NYSE’s continued listing criteria, which requires listed companies to maintain a 30-trading day average market capitalization of at least $50 million plus an average closing share price of at least $1 over a consecutive 30 trading-day period, among other benchmarks. The company has 18 months to regain compliance, and the notice does not affect its business operations, reporting requirements, and debt obligations.

• Walt Disney Co.’s /zigman2/quotes/203410047/composite DIS +0.59% “Mulan” — scheduled for release Aug. 21, and expected to be a summer blockbuster — has been delayed indefinitely because of theater closures and production shutdowns caused by the pandemic. The live-action movie has been repeatedly delayed. Additionally, Disney delayed releases of Star Wars and Avatar movies by a year. “Over the last few months, it’s become clear that nothing can be set in stone when it comes to how we release films during this global health crisis, and today that means pausing our release plans for ‘Mulan’ as we assess how we can most effectively bring this film to audiences around the world,” a Walt Disney Studios spokesperson said in a statement.

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$ 175.03
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$ 154.14
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Ciara Linnane is MarketWatch's investing- and corporate-news editor. She is based in New York.

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