US stocks move lower ahead of important earnings week: April 13, 2020

By CNN Business

Updated 6:20 a.m. ET, April 14, 2020
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11:10 a.m. ET, April 13, 2020

Goldman Sachs: The worst might be over for US stocks because of rescues by Fed and Congress

From CNN Business' Matt Egan

Goldman Sachs is abandoning its pessimistic short-term view on US stocks.

"The Fed and Congress have precluded the prospect of a complete economic collapse," the Wall Street bank wrote in a note to clients on Monday.

The Fed has swiftly rolled out trillions of dollars of lending facilities aimed at avoiding a full-blown financial crisis. Congress and the White House enacted a record-breaking $2 trillion stimulus package.

That powerful response from Washington means that Goldman's previous warning that the S&P 500 will nosedive in the coming months to 2,000 is "no longer likely," the report said.

The S&P 500 hit a low of 2,237 on March 23 but the dramatic rebound has lifted the index back to around 2,735.

So is the worst over for US stocks? That will largely depend on the coronavirus pandemic.

"If the US does not experience a second surge in infections after the economy reopens, the 'do whatever it takes' stance of policymakers means the equity market is unlikely to make new lows," Goldman Sachs wrote.

The Goldman strategists said they've become more confident that the S&P 500 will reach the firm's year-end target of 3,000.

11:01 a.m. ET, April 13, 2020

Ford says it has cash to weather extended shutdown

From CNN Business' Chris Isidore

Ford says it hopes to restart its factories closed for coronavirus by the end of June.

But it said it has enough cash on hand and available to it that it can make it through the end of September without a restart of production outside of China.

Ford (F) issued guidance Monday saying it has $30 billion in cash on hand, including $15.4 billion of proceeds from borrowing last month.

"We believe we have sufficient cash today to get us through at least the end of the third quarter with no incremental vehicle production," said Ford CFO Tim Stone.

Ford has restarted production in China, where the disease shut production earlier and has begun to abate. But Ford's plants elsewhere in the world remain shut.

"The company is considering a scenario for a phased restart of its manufacturing plants, supply network and other dependent functions beginning in the second quarter, with enhanced safety standards in place to protect worker," said Ford.

It said despite a 21% drop in the number of vehicles sold in the first quarter, it expects to report expects to report revenue of about $34 billion in revenue for the period, and about a $600 million loss excluding interest, taxes and special items.

The revenue would be better than Wall Street estimates but the loss would be worse than forecasts. Ford shares fell 5% on the guidance.

10:41 a.m. ET, April 13, 2020

Stocks extend losses

From CNN Business' Anneken Tappe

One hour into the trading day, stocks have extended their losses.

The Dow fell 500 points, or 2.1%, while the S&P 500 was down 2%.

The Nasdaq Composite was down 1.1%.

The only S&P sector in the green is energy as oil prices are bouncing higher thanks to agreed worldwide production cuts. Marathon Oil (MRO) is the best performer in the blue chip index.

9:48 a.m. ET, April 13, 2020

EBay gets a new CEO (finally)

From CNN Business' David Goldman

EBay (EBAY) finally has a new CEO after going without one since September.

The company hired Jamie Iannone, who was most recently chief operating officer of Walmart's online business. Before that, he was CEO of SamsClub.com.

EBay had an interim CEO since September 25, when Devin Wenig resigned, citing conflicts with the board of directors.

The company's stock rose more than 2% Monday.

10:39 a.m. ET, April 13, 2020

GE races to shrink pile of debt

From CNN Business' Matt Egan

The coronavirus recession could thwart efforts to shrink the mountain of debt at General Electric.

Fitch Ratings downgraded GE (GE) Sunday night to BBB -- just two notches above junk territory -- because of concerns the crisis will undermine improvements in the business.

Free cash flow is "likely to weaken materially" in 2020 and leverage "will remain elevated," the credit rating warned.

GE Aviation is getting slammed by deep downturn in the travel industry and Fitch said a "full recovery" in aviation could be "several years away."

By contrast, S&P Global Ratings and Moody's both reaffirmed GE's credit rating in recent days. However, S&P and Moody's have negative outlooks on GE, suggesting potential downgrades.

GE is moving quickly to deploy the $20 billion in proceeds from the sale of its BioPharma business.

The company announced Monday a series of balance sheet moves:

  • Launching a strategic debt issuance to fund a tender for GE bonds
  • GE Capital launched a tender targeting up to $9 billion of debt maturing in 2020
  • GE Capital repaid $4.7 billion of debt that matured in the first quarter
  • Refinancing a back-up credit facility that expires in 2021

"We are taking swift actions to de-risk and de-lever our balance sheet and prudently manage our liquidity amid a challenging external environment," CEO Larry Culp said.

9:35 a.m. ET, April 13, 2020

Stocks start the week lower

From CNN Business' Anneken Tappe

US stocks opened slightly lower on Monday, ahead of what could be the beginning of a sour earnings season. Coronavirus could take a big bite out of earnings, even though the pandemic didn't shut down the US economy until mid-March.

Last week was one for the history books for stocks, with the S&P 500 recording its best week since 1974.

The Dow opened 0.4%, or 100 points, lower.

The S&P 500 kicked off 0.4% lower.

The Nasdaq Composite also fell 0.4%.

9:26 a.m. ET, April 13, 2020

Butt cushions are top sellers, according to mattress maker Purple

From CNN Business' Jordan Valinsky

Working from home has caused a lot of sore butts. That's according to mattress maker Purple (PRPL), which said that demand for its "ancillary products," like seat cushions, sheets and pillows has increased over the past month.

Purple also said that the temporarily closures of its stores haven't hurt business too much because customers have "shifted quite meaningfully" toward buying on its website. In fact, first-quarter sales have grown 35% compared to a year ago.

To help keep cash in the bank during the tumultuous time for it and other retailers, it has furloughed 35% of its permanent staff, which amounts to roughly 250 people. Purple also withdrew its full-year financial guidance.

8:07 a.m. ET, April 13, 2020

Burlington furloughs most of its 47,000 employees

From CNN Business' Jordan Valinsky

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Shutterstock

Burlington (BURL) is the latest major retailer to announce furloughs and executive pay cuts amid the coronavirus crisis.

The company is putting most of its store and distribution center employees on furlough beginning immediately. Burlington employs approximately 47,000 people according to a recent regulatory filing.

Burlington's CEO isn't taking a salary, executives will have their pay slashed by half and the board of directors will "forfeit their cash compensation" during the time.

"The decision to furlough associates was extremely difficult, but it was necessary in order to protect the business during this unprecedented period of disruption," the company said in a press release.

6:30 a.m. ET, April 13, 2020

US stock futures are lower while oil prices move higher

From CNN Business' Clare Duffy

US stock futures were down Monday morning, ahead of a week when many companies will begin reporting earnings for the three months ending in March, offering a look at how corporate America's finances have been hit by coronavirus.

Here's where they stand at 6:15 am ET:

US oil futures advanced 5% to $23.90 a barrel as traders returned from an extended holiday and cheered a deal to slash oil production by 9.7 million barrels a day starting next month.

In stocks, Japan's Nikkei 225 (N225) and South Korea's Kospi (KOSPIfell 1.2% and 0.8%, respectively, in early trading.

China's Shanghai Composite (SHCOMP) lost 0.6%. Hong Kong markets remain closed for the Easter holiday and will reopen on Tuesday.