US stocks keep roaring higher despite protests: June 3, 2020

By CNN Business

Updated 7:56 a.m. ET, June 4, 2020
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11:55 a.m. ET, June 3, 2020

The Nasdaq is nearing all-time highs

From CNN Business' Matt Egan

Mass unemployment. Riots in the streets. A devastating pandemic. And near-record stock prices, at least for the Nasdaq. That's the world we live in.

While Main Street is suffering from a series of crises, Wall Street is swiftly recovering, thanks in large part to easy money from the Federal Reserve.

The Nasdaq has rallied four days in a row, despite widespread civil unrest across America. It's now just 1.5% away from the all-time high of 9,817.2 set in February. The

The sharp rally in the Nasdaq — it's up 41% since March 23 — has been driven by a race to buy large tech stocks, collectively known as FAANG, that are thriving during the pandemic. That includes Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google owner Alphabet (GOOGL).

Yet the stark disconnect between the stock market and economic reality also threatens to worsen wealth inequality — one of the drivers of the civil unrest.

"The stock market taking off — and decoupling from the real economy — is exacerbating inequality," said Kristina Hooper, chief global market strategist at Invesco.

11:41 a.m. ET, June 3, 2020

Dow rallies more than 400 points

From CNN Business' Anneken Tappe

The stock market continues to soar around midday, with the Dow up more than 400 points and the S&P 500 sharply higher as well.

A much better than expected employment report from ADP spurred today's rally, as investors grow more optimistic that the worst might be over for America's battered labor market. The unemployment rate is expected to jump to nearly 20% in May.

The Dow traded up 450 points, or 1.7%, while the S&P soared 1.2%. The Nasdaq Composite was up 0.7%.

11:29 a.m. ET, June 3, 2020

America's services sector improves slightly in May

From CNN Business' Anneken Tappe

The US services sector is still in disarray. But it's recovered a bit from its deep April slump.

That's according to the Institute for Supply Management, which surveys purchasing managers to track changes in business activities from the previous month.

In May, the purchasing managers' index (PMI) stood at 45.4 last month, up from 41.8 in April -- an improvement, and one that was slightly better than economists had expected.

The services sector is extremely important to the US economy. It includes everything from hospitality and entertainment, to travel, finance, real estate and agriculture. The effects of coronavirus hit services the hardest at first, which has made the downturn particularly painful.

Still, the sector seems to have recovered from its trough, even though any PMI level below 50 indicates economic contraction. It was the second contraction in a row following a 122-month period of expansion.

The small rebound "suggests that the services sector is now faring slightly better than the manufacturing sector as lockdowns are lifted. But the overall message is that the wider economic recovery is likely to be slow-going," said Michael Pearce, senior US economist at Capital Economics.

That was reflected in responses in May from purchasing managers, who told ISM they remained concerned about the pandemic's effect on their businesses, although many are planning on the resumption of business, said Anthony Nieves, chair of the ISM's Non-Manufacturing Business Survey Committee.

11:05 a.m. ET, June 3, 2020

US to block Chinese airlines from flying to America

From CNN's Pete Muntean and Gregory Wallace

The US government says it will block Chinese airlines from flying into the United States in response to what the country says is a policy that has prevented American-based carriers from service between the two countries.  

The Transportation Department restrictions will take effect June 16, but could be enacted earlier if President Donald Trump decides to do so.  

It says the Chinese government is violating an agreement between the two countries for international travel by preventing United Airlines (UAL) and Delta Air Lines (DAL) from resuming the trans-oceanic flights. Those airlines had asked to resume service on June 1.  

United, Delta, and American (AAL) suspended service to China due to the coronavirus pandemic. The US government also instituted travel restrictions to reduce the spread of the coronavirus.  

Shares of all three airlines rose around 5% in early trading.

The Transportation Department order said "Chinese aviation authorities have failed to permit US air carriers to" operate the routes they previously flew.  

"The Department will continue to engage our Chinese counterparts so both US and Chinese carriers can fully exercise their bilateral rights," the department said in a statement. 

"In the meantime, we will allow Chinese carriers to operate the same number of scheduled passenger flights as the Chinese government allows ours."

9:55 a.m. ET, June 3, 2020

Another mall staple teeters on the brink of bankruptcy

From CNN Business' Jordan Valinsky

Mall brands were already struggling long before coronavirus, and the pandemic certainly hasn't helped.

New York & Company owner RTW Retailwinds (RTW) warned it might soon file for bankruptcy because of temporary closures caused by Covid-19.

In a regulatory filing Wednesday, the company said it anticipates the pandemic to have "material adverse impact on its financial position, results of operations, and cash flows during fiscal year 2020."

As a result, the company said, it has "substantial doubt" about its ability to survive and it's "probable" that a Chapter 11 bankruptcy protection filing is coming. RTW Retailwinds owns around 400 stores and has 5,000 employees.

The pandemic's effects have hit clothing retailers particularly hard. J.Crew, JCPenney and Neiman Marcus all have filed for bankruptcy within the past month.

9:45 a.m. ET, June 3, 2020

ADP jobs numbers: Could we dare to think the worst may be over?

From CNN Business' Anneken Tappe

This morning's ADP employment report wasn't just better than expected. It was so much that it spurred experts to grow optimistic that the worst might be over.

Consensus estimates predicted 9 million private-sector jobs were lost in May. But the actual drop was only 2.8 million, ADP reported.

White House economic adviser Kevin Hassett -- who initially expressed some disbelief that the numbers and wondered "if there's not something funny going on" -- said the report was a good sign that "people are getting back to work."

The ADP report comes ahead of Friday's jobs report from the Bureau of Labor Statistics. Economists predict 8 million lost jobs and an unemployment rate of nearly 20%, which could be the peak.

JPMorgan economist Daniel Silver noted "the ADP report isn't always a reliable predictor of the BLS data." Still, "it suggests that the pace of job loss moderated noticeably between April and May, even though it remained substantial relative to pre-Covid-19 norms."

May's ADP report also showed a change in the sectors where job losses occurred compared to last month -- a stark reminder of how the pandemic is rippling through the economy. While April's report revealed devastation to the hospitality sector, May's biggest drops were in transportation and manufacturing.

"There are two big questions about the job market over the next few months," said PNC chief economist Gus Faucher.

"First, will job losses turn to job gains as businesses reopen? And second, if so, will the pace of job growth bring back millions of jobs in the second half of 2020, rapidly replacing those jobs lost during the Viral Recession, or will it be a much slower process?"

CNN's Betsy Klein contributed to this report.

9:34 a.m. ET, June 3, 2020

Stocks rally at the open

From CNN Business' Anneken Tappe

US stocks rallied at the opening bell on Wednesday, following some surprising news about the US labor market.

The ADP national employment report showed far fewer jobs were lost in April than expected – 2.8 million versus 9 million predicted. This could be a good sign that people are returning to work and the worst is over for America’s labor market, which was devasted by the coronavirus lockdown. Friday’s jobs report from the Bureau of Labor Statistics is still expected to show an unemployment rate of nearly 20%, but experts think this could be the peak.

8:34 a.m. ET, June 3, 2020

AMC Theaters isn't optimistic about its future

From CNN Business' Jordan Valinsky

AMC Theaters (AMC) is "generating effectively no revenue" because of the prolonged shutdowns caused by Covid-19. And if it can't reopen anytime soon, it has "substantial doubt" about its "ability to continue as a going concern for a reasonable period of time."

The chain made the stark warning in a preview of its first quarter earnings, which will be released next week. AMC expects to lose about $2.4 billion in the first three months of 2020.

AMC shares fell 2% in premarket trading.

8:31 a.m. ET, June 3, 2020

Another 2.8 million private-sector jobs disappeared in May -- far less than expected

From CNN Business' Anneken Tappe

Another 2.8 million private-sector jobs disappeared in May, according to the ADP national employment report.

The private sector lost far fewer jobs than expected: Economists surveyed by Refinitiv had forecast 9 million lost jobs last month.

In April, ADP reported a revised 19.6 million jobs vanished, the worst month since the company began reporting national employment numbers in 2002.

All segments of the economy were decimated again in May, but large businesses with 500 employees or more accounted for more than half the jobs lost -- 1.6 million.

Nearly 2 million of the losses occurred in the battered services industry, with the trade, transportation and utilities sector leading the declines. In the goods-producing industry, manufacturing shed the most jobs.

“The impact of the COVID-19 crisis continues to weigh on businesses of all sizes,” said Ahu Yildirmaz, co-head of the ADP Research Institute. “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”

The ADP report comes two days ahead of the US Bureau of Labor Statistics' jobs report, which is due Friday morning.

Economists polled by Refinitiv expect another 8 million jobs lost in May, following a 20.5 million drop in April. That would push the unemployment rate to nearly 20%, a new record high.