What started off as a bang quickly died out. Equities came into the stock market today on a high note on hopes that Gilead Sciences (NASDAQ:GILD) would crack the code on a novel coronavirus treatment.
On Thursday after the close, a report talked up the promising impact Gilead’s remdesivir is having on Covid-19 patients. We don’t see this very often, but that bit of news did a lot more than send GILD stock higher by 15% in after-hours trading. Instead, it sparked a market-wide surge, while Gilead climbed about 9.7% on the day.
Dow Jones Industrial Average futures rallied more than 800 points overnight, while the S&P 500 jumped almost 100 points. All sorts of stocks were going bananas. At least, until the market opened on Friday morning. Markets popped to their morning highs shortly after the open, then bumbled along the lows for most of the day until a late-session squeeze sent equities rocketing higher.
The S&P 500 ended higher by 2.7%, closing above its 50-day moving average for the first time since Feb. 21.
Trouble at Berkshire?
Investors have been wondering about Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B). With so much chaos in the stock market, many assume Buffett has been buying hand over fist, particularly with the firm holding more than $100 billion in cash.
However, mum has been the word with Berkshire, with just a few reports of the company lightening up on its stakes in Delta Air Lines (NYSE:DAL) and Southwest (NYSE:LUV).
However, we’ve finally heard from Berkshire’s Charlie Munger. “We will be fairly conservative. And we’ll emerge on the other side very strong.” He added that, unlike in years past when companies have called to Berkshire for help, that hasn’t been the case this year. “The phone is not ringing off the hook,” he said.
Finally, Munger said, “This will cause us to shutter some businesses. …We’ve got a few businesses, small ones, we won’t reopen when this is over.”
Movers in the Stock Market Today
Goldman Sachs downgraded Apple (NASDAQ:AAPL) to a “sell” from a “neutral” rating, due to weaker iPhone demand expectations. The firm also cut Apple’s price target from $250 to $233, implying 19% downside. Goldman Sachs predicts a 36% decline in iPhones sales in the second quarter and a 24% drop in the first half of calendar year 2020.
Kohl’s (NYSE:KSS) secured a $1.5 billion loan and can refinance roughly $1 billion of existing debt. The company also announced the suspension of its dividend, which comes as little surprise with its yield north of 15%. Shares rallied 4.9% in the stock market today, despite the news.
General Electric’s (NYSE:GE) aircraft leasing subsidiary just cancelled an order worth at least $6.9 billion — before any discounts — for 69 Boeing (NYSE:BA) 737 Max jets. This news comes just a few days after Boeing logged 150 737 Max cancellations in March. Although the company is struggling, its stock climbed over 14.5% Friday on news that Boeing is going to restart its Seattle area manufacturing next week.
On April 28, Ford (NYSE:F) is scheduled to announce its first-quarter results, where management expects a net loss of $2 billion. Ford expects a 16% decrease in sales for the quarter, paired with a pretax loss of about $600 million. On the flip side, some promising news in auto comes from reports that European automakers are planning to reopen car plants. Volkswagen (OTCMKTS:VWAGY), Volvo and Mercedes-Benz are all beginning to reopen next week, while Renault (OTCMKTS:RNLSY) reopened in Portugal last week.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL.