During a separate online talk, Atlanta Fed President Raphael Bostic said COVID-19 may be threatening the pace of the U.S. recovery, according to a Bloomberg report , a day after he described the recovery as “leveling off,” and raising doubts about a V-shaped, or swift and powerful, economic rebound.
The warnings come as some states roll back business reopenings with COVID-19 cases soaring. Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, said Tuesday that the U.S., unlike much of Europe, is now seeing “the consequence of community spread, which is even more difficult to contain.”
Market participants also attributed some of the day’s malaise to dimming outlook for quarterly corporate earnings reports, even though they are widely expected to be poor, given the challenges posed by the pandemic.
Refinitiv’s latest earnings scorecard has the S&P 500 index’s second quarter, year over year, blended earnings growth estimate at negative 43.4%, while noting the growth rate for the index drops to negative 38.2% if the battered energy sector is excluded.
On the global front, the Organization for Economic and Cooperation and Development said on Tuesday that unemployment will reach the highest level since the Great Depression and may not return to pre-crisis levels until 2022. In addition, the European Commission lowered its eurozone economic forecast by a percentage point, predicting a contraction of 8.7% this year.
Which stocks were in focus?
Shake Shack Inc . /zigman2/quotes/209397077/composite SHAK -0.82% stock fell 6.6% after the burger chain announced preliminary second-quarter sales that missed expectations. Shake Shack said sales totaled $91.8 million for the quarter ending June 24, below the FactSet consensus for $101.0 million.
Novavax ’s /zigman2/quotes/202614340/composite NVAX -6.19% experimental COVID-19 vaccine received a $1.6 billion commitment from the U.S. government to help the company expedite testing and production by the beginning of next year, even though it is still in an early phase trial involving 130 participants with nongovernmental funding. Its stock climbed 31.6%.
Shares of Corvus Pharmaceuticals Inc. /zigman2/quotes/208484371/composite CRVS -1.11% soared 80.8% on Tuesday after the company said it launched an open-label Phase 1 clinical trial to test an experimental monoclonal antibody as a treatment for COVID-19.
Paychex Inc . /zigman2/quotes/202030365/composite PAYX -1.17% said Tuesday it had net income of $220.7 million, or 61 cents a share, in its fiscal fourth quarter to May 31, down from $230.4 million, or 64 cents a share, in the year-earlier period. Shares fell 4.9%.
Shares of Regeneron Pharmaceuticals Inc . /zigman2/quotes/203149337/composite REGN -1.73% gained 2.2% on Tuesday after the drugmaker said it received $450 million from the federal government to manufacture and supply its still investigational COVID-19 treatment.
Residential solar-panel installer Sunrun Inc. /zigman2/quotes/205021014/composite RUN +2.25% announced a deal Monday night to acquire rival Vivint Solar Inc . /zigman2/quotes/202100570/composite VSLR +1.53% for about $3.2 billion, including debt. Shares of Sunrun surged 22.6% Tuesday, while those for Vivint rose 38.2%.
Tesla Inc . /zigman2/quotes/203558040/composite TSLA +4.42% shares edged 1.3% higher after Adam Jonas of Morgan Stanley upped his price target on Tuesday for shares of the electric car maker to $740, implying a downside of around 47% from Tuesday’s share price, but also said there’s a $2,0270 “bull case” for the stock price.
How did other assets perform?
West Texas Intermediate U.S. crude for August delivery ended little changed, down only a penny, at $40.62 a barrel, on the New York Mercantile Exchange, after slipping less than 0.1% on Monday. In precious metals, August gold futures soared $16.40, or 0.%, to end at $1,809.90 an ounce, its highest level since Sept. 2011.
The greenback rose 0.3% against a basket of its major rivals, based on trading in the ICE U.S. Dollar Index. /zigman2/quotes/210598269/delayed DXY +0.03%
In European equities, the Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.66% ended 0.6% lower, and London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.71% declined 1.5%. In Asia markets, the Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +2.07% closed up 0.4%, the CSI 300 Index /zigman2/quotes/210598128/delayed XX:000300 +2.25% finished 0.6% higher after yesterday’s 5.7% rally. Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.47% fell 1.4% and South Korea’s Kospi Composite Index /zigman2/quotes/210598069/delayed KR:180721 +0.26% fell 1.1%.